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Comparison of

RA No. 10963
and RA No. 8424,
as amended
Rotary Club of Manila
January 25, 2018

This report is solely for the use of client personnel. No part of it may be circulated, quoted or reproduced for distribution outside
the client organization without prior written approval from Reyes Tacandong & Co.
Background of the Tax Reform
• The Tax Reform for Acceleration and Inclusion amends certain provisions of
Republic Act No. 8424 (The National Internal Revenue Code of 1997), as
amended.

• The enrolled bill was sent to President Duterte for approval and was signed into
law as Republic Act No. 10963 on December 19, 2017. The law takes effect
this January 1, 2018 following its complete publication in the Official Gazette last
December 27, 2017.

• The President has issued a separate letter vetoing 5 provisions of the signed
TRAIN Law.

• The law is just the first tax reform package. The second package (reduction of
corporate income tax and rationalization of fiscal incentives) is estimated to be
released by early 2018.

SL - 2 CONFIDENTIAL
Key amendments
The amendments focus on:
• Individual Income Tax
• Final Income Tax
• Estate Tax
• Donor’s Tax
• Value Added Tax
• Excise Tax on:
– Automobiles
– Petroleum products
– Sweetened beverages
– Mineral products
– Cosmetic surgeries (non-essential services)
• Documentary Stamp Tax
• Some administrative provisions
• Penalties

SL - 3 CONFIDENTIAL
Power and authority of the
Commissioner
Power and authority of the Commissioner
NIRC Provision NIRC TRAIN
Section 5 (B) Provides for the authority of the Additional provision:
Power of the Commissioner to obtain The Cooperative Development
Commissioner to information from national and Authority shall submit a report
obtain information, and local governments, government on tax incentives availed by
to summon, examine agencies and instrumentalities cooperatives to the BIR and
and take testimony of DOF.
persons
These information shall be
included in the Tax Incentives
Management and
Transparency Act (TIMTA)
database.

SL - 5 CONFIDENTIAL
Power and authority of the Commissioner
NIRC Provision NIRC TRAIN
Section 6 The Commissioner has the In exercising this authority, the
following shall be observed:
Power of the authority to determine fair 1. Mandatory consultation with both
Commissioner to make market value of real properties. private and public competent
appraisers before division of the
assessments and Philippines into zones.
prescribe additional 2. Prior notice to affected taxpayers
before the determination of fair
requirements for tax market values of the real
administration and properties.
enforcement 3. Publication or posting of
adjustments in zonal value in a
newspaper of general circulation
in the province, city or
municipality concerned.
4. The basis of valuation and
records of consultation shall be
public records open to the inquiry
of any taxpayer.
5. Zonal valuations shall be
automatically adjusted once
every three years.

SL - 6 CONFIDENTIAL
Personal and/or Corporate
Income Tax
Personal Income Tax
NIRC Provision NIRC TRAIN
Section 24 Taxable income of individuals The amendment provides for
Income tax rates on are subject to the following revised personal income tax
Individual Citizen and graduated rates: brackets for 2018-2022:
Individual Resident TAX SCHEDULE EFFECTIVE
TAX SCHEDULE JANUARY 1, 2018 TO
Alien of the Philippines
DECEMBER 31, 2022
Not over 5% Not over 0%
₱10,000 ₱250,000
Over ₱10,000 ₱500 + 10% of the
but not over excess over
₱30,000 ₱10,000
Over ₱30,000 ₱2,500 + 15% of
but not over the excess over
₱70,000 ₱30,000
Over ₱70,000 ₱8,500 + 20% of
but not over the excess over
₱140,000 ₱70,000
Over ₱140,000 ₱22,500 + 25% of
but not over the excess over
₱250,000 ₱140,000

SL - 8 CONFIDENTIAL
Personal Income Tax
NIRC Provision NIRC TRAIN
Section 24 Taxable income of individuals The amendment provides for
Income tax rates on are subject to the following revised personal income tax
Individual Citizen and graduated rates: brackets for 2018-2022:
Individual Resident TAX SCHEDULE EFFECTIVE
TAX SCHEDULE JANUARY 1, 2018 TO
Alien of the Philippines
DECEMBER 31, 2022
Over ₱250,000 ₱50,000 + 30% of Over ₱250,000 20% of the excess
but not over the excess over but not over over ₱250,000
₱500,000 ₱250,000 ₱400,000
Over ₱500,000 ₱125,000 + 32% of Over ₱400,000 ₱30,000 + 25% of
the excess over but not over the excess over
₱500,000 ₱800,000 ₱400,000
Over ₱800,000 ₱130,000 + 30% of
but not over the excess over
₱2M ₱800,000
Over ₱2M but ₱490,000 + 32% of
not over ₱8M the excess over ₱2M
Over ₱8M ₱2,410,000 + 35% of
the excess over ₱8M

SL - 9 CONFIDENTIAL
Personal Income Tax
NIRC Provision NIRC TRAIN
Section 24 For 2023 onwards:
Income tax rates on
TAX SCHEDULE EFFECTIVE
Individual Citizen and JANUARY 1, 2023 onwards
Individual Resident
Not over 0%
Alien of the Philippines
₱250,000
Over ₱250,000 15% of the excess
but not over over ₱250,000
₱400,000
Over ₱400,000 ₱22,500 +
but not over 20% of the excess
₱800,000 over ₱400,000
Over ₱800,000 ₱102,500 + 25% of
but not over the excess over
₱2,000,000 ₱800,000
Over ₱2M but ₱402,500 + 30% of
not over ₱8M the excess over ₱2M
Over ₱8M ₱2,202,500 + 35% of
the excess over ₱8M

SL - 10 CONFIDENTIAL
Personal Income Tax
NIRC Provision NIRC TRAIN
Section 24 Note that the BIR issued
Income tax rates on through Revenue
Individual Citizen and Memorandum Circular No. 1-
Individual Resident 2018 the revised withholding
Alien of the Philippines tax on compensation table.

SL - 11 CONFIDENTIAL
Personal Income Tax
NIRC Provision NIRC TRAIN
Section 24 Taxable income is subject to For Purely Self-employed
Income tax of self- the same graduated rates. and/or Professionals whose
employed and/or gross sales/receipts and other
professionals non-operating income do not
exceed the VAT threshold of
₱3M, the tax shall be, at the
taxpayer’s option, either:
1. 8% income tax on gross
sales or gross receipts in
excess of ₱250,000 in lieu
of the graduated income tax
rates and the percentage
tax; OR
2. Income tax based on the
graduated income tax rates
for individuals.

SL - 12 CONFIDENTIAL
Personal Income Tax
NIRC Provision NIRC TRAIN
Section 24 Taxable income is subject to For mixed income earners
Income tax of mixed the same graduated rates. (earning both compensation
income earners income and income from
business or practice of
profession, their income taxes
shall be:

1. For income from


compensation –
Graduated income tax rates
for individuals, AND

SL - 13 CONFIDENTIAL
Personal Income Tax
NIRC Provision NIRC TRAIN
Section 24 Taxable income is subject to 2. For income from business
the same graduated rates. or practice of profession:
Income tax of mixed
a. Gross sales/receipts
income earners which do not exceed the
VAT threshold of ₱3M —
8% income tax on gross
sales/receipts and other
non-operating income
income OR graduated
income tax rates on
taxable income, at the
taxpayer’s option
b. Gross sales/receipts and
other non-operating
income which exceeds
the VAT threshold of ₱3M
— graduated income tax
rates for individuals.

SL - 14 CONFIDENTIAL
Personal Income Tax
NIRC Provision NIRC TRAIN
Section 24 (B)(1) Philippine Charity Sweepstakes Philippine Charity Sweepstakes
Final tax on winnings and Lotto winnings is exempt and Lotto winnings in excess of
from the 20% final tax. ₱10,000 shall be subject to the
20% final tax.

SL - 15 CONFIDENTIAL
Personal Income Tax
NIRC Provision NIRC TRAIN
Section 24 (B)(1) Interest income received by an The rate of final tax on interest
Final tax on interest on individual taxpayer (except a income received by resident
foreign currency non-resident individual) from a individual taxpayer under the
deposit depository bank under the expanded foreign currency
expanded foreign currency deposit system increased from
deposit (EFCD) system is 7.5% to 15% final tax.
subject to 7.5% final tax.

SL - 16 CONFIDENTIAL
Personal Income Tax
NIRC Provision NIRC TRAIN
Section 24 (C) The capital gains tax on net The final tax rate for net capital
Capital gains tax on capital gains realized from sale, gains tax on the sale, barter,
sale of shares not barter, or exchange or other exchange or other disposition
traded through the disposition of shares of stock in of shares of stock in a domestic
stock exchange a domestic corporation not corporation not traded through
traded through the stock the stock exchange is
exchange is: increased from the 5/10% CGT
to a flat rate of 15% CGT.
Not over ₱100,000 – 5%

On any amount in excess of


₱100,000 – 10%

SL - 17 CONFIDENTIAL
Personal Income Tax
NIRC Provision NIRC TRAIN
Section 25 (C), (D), (E) Alien individuals and qualified Additional provision
Preferential tax rate for Filipino employees employed by [Subsection (F)]:
individuals employed 1. Regional or area and The 15% preferential tax rate
by RHQ, ROHQ, OBU Regional Operating provided in Subsections (C), (D),
headquarters of multinational and (E) shall not be applicable to
and Petroleum
companies (RHQs and RHQs, ROHQs, OBUs or
Contractors and
ROHQs) [Subsection (C)] Petroleum service contractor and
subcontractors
subcontractor registering with the
2. Offshore banking units
SEC after January 1, 2018.
(OBUs) [Subsection (D)]
3. Petroleum Service contractor
But existing RHQs, ROHQs,
and subcontractor
OBUs or Petroleum service
[Subsection (E)]
contractor and subcontractor
are subject to a preferential tax shall continuously be entitled to
of 15% final withholding tax on avail of the preferential tax
gross compensation income. treatment for their present and
future qualified employees.

SL - 18 CONFIDENTIAL
Personal Income Tax
NIRC Provision NIRC TRAIN
Section 25 (C), (D), (E) Presidential Veto:
The President vetoed this line item
Preferential tax rate for under Subsection (F):
individuals employed
by RHQ, ROHQ, OBU “But existing RHQs, ROHQs, OBUs
and Petroleum or Petroleum service contractor and
subcontractor shall continuously be
Contractors and entitled to avail of the preferential tax
subcontractors treatment for their present and future
qualified employees.”

for being violative of equal protection.

The President stated in his letter that


“[g]iven the significant reduction in
the personal income tax, the
employees of these firms should
follow the regular tax rates applicable
to other individual taxpayers.”

SL - 19 CONFIDENTIAL
Personal Income Tax
NIRC Provision NIRC TRAIN
Section 31 Means the pertinent items of The phrase “and/or personal
Definition of Taxable gross income specified in this and additional exemptions” is
Income Code, less the deductions removed in the definition.
and/or personal and additional
exemptions, if any, authorized
for such types of income by this
Code or other special laws

SL - 20 CONFIDENTIAL
Personal Income Tax
NIRC Provision NIRC TRAIN
Section 35 Individual taxpayers are The Basic Personal and
Personal Exemptions entitled to: Additional Exemptions of
Basic Personal Exemption — individual taxpayers are
₱50,000 removed.
and
Additional Exemption — The related provision on
₱25,000 per qualified furnishing of exemption
dependent child. certificate is likewise removed.

SL - 21 CONFIDENTIAL
Personal Income Tax
NIRC Provision NIRC TRAIN
Section 32 (B) The amount of tax-exempt 13th The amount of tax-exempt 13th
Tax exempt 13th month month pay and other benefits is month pay and other benefits is
pay ₱82,000. increased to ₱90,000.

SL - 22 CONFIDENTIAL
Personal Income Tax
NIRC Provision NIRC TRAIN
Section 33 (A) • Fringe benefits given to non- • The Fringe Benefits Tax is
Tax on fringe benefits rank and file employees are increased to 35% effective
given to non-rank and subject to 32% final tax. January 1, 2018.
file employees • The grossed up monetary • The grossed up monetary
value of the fringe benefit value of the fringe benefit
given to non-rank and file given to non-rank and file
employees shall be employees shall be
determined by dividing the determined by dividing the
actual monetary value by actual monetary value by
68%. 65%.

SL - 23 CONFIDENTIAL
Personal Income Tax
NIRC Provision NIRC TRAIN
Section 34 (M) The allowable deduction for Allowable deduction for
Allowable deduction for premium payments on health premium payments on health
premium payments on and/or hospitalization and/or hospitalization
health and/or insurance of an individual insurance of an individual
hospitalization taxpayer is ₱2400 per year or taxpayer is removed.
insurance ₱200 per month, subject to a
gross family income threshold
of ₱250,000.

SL - 24 CONFIDENTIAL
Personal Income Tax
NIRC Provision NIRC TRAIN
Section 51 An individual whose gross Individual taxpayers whose
Filing of individual income does not exceed his taxable income is subject to
income tax return total personal and additional zero percent under the new
exemptions for dependents are graduated tax table (i.e., does
not required to file income tax not exceed ₱250,000) shall not
return (ITR). be required to file an income
tax return.

SL - 25 CONFIDENTIAL
Personal Income Tax
NIRC Provision NIRC TRAIN
Additional provision:
The ITR shall consist of a
maximum of four (4) pages in
paper OR electronic form. It shall
only contain the following
information:
• Personal profile and
information
• Gross sales receipts or income
from compensation, from
business, or from exercise of
profession (except income
subject to final tax)
• Allowable deductions
• Taxable income
• Income tax due and payable
SL - 26 CONFIDENTIAL
Personal Income Tax
NIRC Provision NIRC TRAIN
Section 51-A No provision. Substituted filing of ITRs is
available for:
Substituted Filing of
• Individual taxpayers
Income tax returns by
employees receiving • Receiving purely
compensation income,
purely compensation regardless of amount
income from only one
• From only one employer in the
employer in the Philippines for the calendar
Philippines year
• The income tax of which has
been correctly withheld by the
employer (i.e. tax due = tax
withheld)
The Certificate of Withholding
filed by the employers duly
stamped “received” by the BIR
shall be the substituted filing by
such employers.
SL - 27 CONFIDENTIAL
Personal Income Tax
NIRC Provision NIRC TRAIN
Section 56 (A)(2) When tax due exceeds ₱2,000, The new deadline of payment
Installment Payment of the taxpayer (other than a of second installment is
tax due for individuals corporation) may elect to pay October 15 following the close
and corporations the tax in two equal of the calendar year.
installments. Payment of
installments:
• First installment — time of
filing of return
• Second installment — on or
before July 15 following the
close of the calendar year.

SL - 28 CONFIDENTIAL
Personal Income Tax
NIRC Provision NIRC TRAIN
Section 62 There is an allowed personal The exemption for estates and
Exemption for estates exemption of ₱50,000 from the trusts is removed.
and trusts income of the estate or trust.

SL - 29 CONFIDENTIAL
Personal Income Tax
NIRC Provision NIRC TRAIN
Section 74 Every individual subject to The deadline for filing of
income tax shall make and file a declaration estimated income
Declaration of Income
declaration of his estimated for the current taxable year is
tax for individuals income for the current taxable on or before May 15 of the
year on or before April 15 of the same taxable year.
same taxable year.

The amount of estimated income The payment of the four


with respect to which a installments shall be:
declaration is required shall be • First – May 15
paid in four (4) installments: • Second – August 15
• First – at time of declaration • Third – November 15
• Second – August 15 • Fourth – on or before May 15
• Third – November 15 of the following calendar year
• Fourth – on or before April 15 when the final adjusted
of the following calendar year income tax return is due to
when the final adjusted income be filed.
tax return is due to be filed.

SL - 30 CONFIDENTIAL
Personal and Corporate Income Tax
NIRC Provision NIRC TRAIN
Section 34 (L) Individual taxpayers (except For GPPs and the partners
Optional Standard non-resident alien) and comprising them, OSD may be
Deduction corporations may elect a availed only once, i.e., either by
standard deduction not the GPP itself or by the
exceeding 40% of gross partners comprising the GPP.
sales/receipts or of gross
income, as the case may be, in
lieu of itemized allowable
deductions.

SL - 31 CONFIDENTIAL
Personal and Corporate Income Tax
NIRC Provision NIRC TRAIN
Section 57 The rate of withholding tax on Beginning January 1, 2019, the
Withholding of items of income payable by rate of withholding tax shall be
creditable tax at source payor-corporations/persons not less than one percent (1%)
shall be not less than one but not more than fifteen
percent (1%) but not more than percent (15%).
thirty-two percent (32%).
Revenue Memorandum
The tax withheld shall be Circular No. 1-2018 provides
credited against the income tax that the applicable EWT rate on
liability of the taxpayer. income payments to self-
employed individuals/
professionals is 8%.

SL - 32 CONFIDENTIAL
Corporate Income Tax
NIRC Provision NIRC TRAIN
Section 27 (C) The Philippine Charity PCSO is not anymore exempt
Exemption Sweepstakes Office (PCSO) is from payment of corporate
Government-owned or among the list of GOCCs, income tax.
agencies, or instrumentalities
-Controlled
that are exempt from payment
Corporations, Agencies
of corporate income tax.
or Instrumentalities

SL - 33 CONFIDENTIAL
Corporate Income Tax
NIRC Provision NIRC TRAIN
Section 27 (D)(1) Interest income received by a The rate of final tax on interest
Final Tax on interest on domestic corporation from a income received by domestic
foreign currency depository bank under the corporation under the
deposit expanded foreign currency expanded foreign currency
deposit (EFCD) system is deposit system increased from
subject to 7.5% final tax. 7.5% to 15% final tax.

SL - 34 CONFIDENTIAL
Corporate Income Tax
NIRC Provision NIRC TRAIN
Section 27 (D)(2) The capital gains tax on net The final tax rate for net capital
Capital gains tax on capital gains realized from sale, gains tax on the sale, barter,
sale of shares not barter, or exchange or other exchange or other disposition
traded through the disposition of shares of stock in of shares of stock in a domestic
stock exchange a domestic corporation not corporation not traded through
traded through the stock the stock exchange is
exchange is: increased from the 5/10% CGT
to a flat rate of 15% CGT.
Not over ₱100,000 – 5%

On any amount in excess of


₱100,000 – 10%

SL - 35 CONFIDENTIAL
Corporate Income Tax
NIRC Provision NIRC TRAIN
Section 52 Every corporation subject to Additional provision:
Filing of corporate tax, except foreign corporations
income tax return not engaged in trade or
The ITR shall consist a
business in the Philippines,
maximum of four (4) pages in
shall render in duplicate, a true
paper OR electronic form.
and accurate
• quarterly income tax
return; AND It shall also only contain the
information as required in ITRs
• Final or adjustment return.
of individual taxpayers.

These requirements shall not


affect the implementation of
TIMTA.

SL - 36 CONFIDENTIAL
Final Withholding Tax and Expanded Withholding
Tax Returns
NIRC Provision NIRC TRAIN
Section 58 The return for FWT and the FWT and EWT returns shall be
Return and payments return for creditable withholding filed and the payment made not
of taxes withheld at taxes (EWT returns) shall be later than the last day of the
source filed within ten (10) days after month following the close of
the end of each month [Sec. the quarter during which the
2.58 of RR No. 2-98)] withholding was made.

The provision that the


Commissioner may require the
payment of the taxes withheld
at more frequent intervals is
removed.

SL - 37 CONFIDENTIAL
Estate Tax
Estate Tax
NIRC Provision NIRC TRAIN
Section 84 The estate tax rate is based on The estate tax rate is fixed at
Rates of estate tax a graduated schedule. 6% based on the value of the
net estate.
NET ESTATE TAX
Not over ₱200,000 Exempt
Over ₱200,000 5% of the excess
but not over over ₱200,000
₱500,000
Over ₱500,000 ₱15,000 + 8% of
but not over ₱2M the excess over
₱500,000
Over ₱2M but not ₱135,000 + 11%
over ₱5M of the excess over
₱2M
Over ₱5M but not ₱465,000 + 15%
over ₱10M of the excess over
₱5M
Over ₱10M ₱1,215,000 +
20% of the excess
over ₱10M

SL - 39 CONFIDENTIAL
Estate Tax
NIRC Provision NIRC TRAIN
Section 86 (A) The value of the net estate of a The following are the allowable
resident or citizen is deductions from the gross
Allowable deductions
determined by deducting the estate of a resident or citizen:
from the gross estate following from the gross estate:
of a citizen or resident 1. Standard deduction of
1. Standard deduction of
₱1,000,000; ₱5,000,000;
2. Expenses, losses, 2. Claims against the estate;
indebtedness, and taxes 3. Claims against insolvent
a. Funeral expenses persons;
b. Judicial expenses 4. Unpaid mortgage or
c. Claims against the indebtedness on property;
estate
d. Claims against insolvent
persons
e. Unpaid mortgages

SL - 40 CONFIDENTIAL
Estate Tax
NIRC Provision NIRC TRAIN
Section 86 (A) 5. Property previously taxed; 5. Property previously taxed;
Allowable deductions 6. Transfers for public use; 6. Transfers for public use;
from the gross estate 7. Family home in the amount 7. Family home, in the
of a citizen or resident of ₱1,000,000; increased amount of
8. Medical expenses, not ₱10,000,000;
exceeding ₱500,000 8. Amounts received by heirs
9. Amount received by heirs under RA No. 4917
under RA No. 4917 (Retirement benefits of
(Retirement benefits of private firm employees)
private firm employees)

SL - 41 CONFIDENTIAL
Estate Tax
NIRC Provision NIRC TRAIN
Section 86 (B) The value of the net estate of a For Non-residents:
Allowable deductions non-resident is determined by 1. Standard deduction in the
from the gross estate deducting the following from amount of ₱500,000
of a non-resident the gross estate:
2. Value of
1. Expenses, losses,
• Claims against the estate
indebtedness, and taxes in
proportion to the value of • Claims against insolvent
the entire gross estate person
situated in the Philippines; • Unpaid mortgages
2. Property previously taxed; In proportion to the value of
3. Transfers for public use the entire gross estate
situated in the Philippines
3. Property previously taxed
4. Transfer for public use

SL - 42 CONFIDENTIAL
Estate Tax
NIRC Provision NIRC TRAIN
Section 86 (D) No deduction shall be allowed Miscellaneous provision is
Miscellaneous in the case of a nonresident not deleted.
provision for non- a citizen of the Philippines,
residents unless the executor,
administrator, or anyone of the
heirs, as the case may be,
includes in the return required
to be filed under Section 90 the
value at the time of his death of
that part of the gross estate of
the nonresident not situated in
the Philippines.

SL - 43 CONFIDENTIAL
Estate Tax
NIRC Provision NIRC TRAIN
Section 89 Notice of decedent’s death Requirement for filing of notice
Notice of death shall be filed by the executor, of death is removed.
administrator, or any of the
legal heirs within two months
after death or after qualifying
as such executor or
administrator:
• In all cases of transfers
subject to tax
• In cases where though
exempt from tax, the gross
value of the estate exceeds
₱20,000.

SL - 44 CONFIDENTIAL
Estate Tax
NIRC Provision NIRC TRAIN
Section 90 Estate tax returns showing a The threshold amount for the
Attachment to Estate gross value exceeding requirement of attaching a
Tax Return - CPA ₱2,000,000 shall be supported statement duly certified by a
certification with a statement duly certified CPA is increased to
by a CPA. ₱5,000,000 (from ₱2,000,000).

SL - 45 CONFIDENTIAL
Estate Tax
NIRC Provision NIRC TRAIN
Section 90 (B) Estate tax returns shall be filed The filing of estate tax returns
Time of filing of estate within six (6) months from the shall be within one (1) year
tax return decedent’s death. from the decedent’s death.

SL - 46 CONFIDENTIAL
Estate Tax
NIRC Provision NIRC TRAIN
Section 91 (C) No provision In case the available cash of
Payment by installment the estate is insufficient to pay
of estate tax [new] the total estate tax due,
payment by installment shall be
allowed within two (2) years
from the statutory date of
payment, without civil
penalty and interest.

SL - 47 CONFIDENTIAL
Estate Tax
NIRC Provision NIRC TRAIN
Section 97 If a bank has knowledge of the If a bank has knowledge of the
Payment of tax death of a person, who death of a person, who
antecedent to the maintained a bank deposit maintained a bank deposit
transfer of shares, account alone, or jointly with account alone, or jointly with
bonds, or rights another, it shall not allow any another, it shall allow any
withdrawal from the said withdrawal from the said
deposit account unless the deposit account, subject to a
Commissioner has certified that final withholding tax of (6%).
the taxes imposed thereon
have been paid.

SL - 48 CONFIDENTIAL
Donor’s Tax
Donor’s Tax
NIRC Provision NIRC TRAIN
Section 99 The donor’s tax for each The donor’s tax is fixed at 6%
Rates of tax calendar year shall be based on annual total gifts
computed on the basis of the exceeding ₱250,000 (exempt
total net gifts made during the gift), regardless of whether the
calendar year in accordance donee is a stranger or not.
with the graduated tax table.
NET GIFT TAX NET GIFT TAX
Not over ₱100,000 Exempt Over ₱1M but not ₱44,000 + 8% of
Over ₱100,000 2% of the excess over ₱3M the excess over
but not over over ₱100,000 ₱1M
₱200,000 Over ₱3M but not ₱204,000 + 10%
Over ₱200,000 ₱2,000 + 4% of over ₱5M of the excess over
but not over the excess over ₱3M
₱500,000 ₱200,000 Over ₱5M but not ₱404,000 + 12%
Over ₱500,000 ₱14,000 + 6% of over ₱10M of the excess over
but not over ₱1M the excess over ₱5M
₱500,000 Over ₱10M ₱1,004,000 +
15% of the excess
over ₱10M

SL - 50 CONFIDENTIAL
Donor’s Tax
NIRC Provision NIRC TRAIN
Section 99 The donor’s tax shall be 30% The donor’s tax is fixed at 6%
Rates of tax of the net gifts when the donee based on annual total gifts
or beneficiary is a stranger. exceeding ₱250,000 (exempt
gift), regardless of whether the
donee is a stranger or not.

SL - 51 CONFIDENTIAL
Donor’s Tax
NIRC Provision NIRC TRAIN
Section 100 The amount by which the fair Additional proviso:
Transfer for less than market value of the property Even if the sale, exchange, or
adequate consideration transferred exceeded the value other transfer of property is for
of the consideration received an insufficient consideration,
for such transfer, shall for the same will still be
purpose of donor’s tax, be considered made for
deemed a gift, and included in adequate and full
computing the amount of gifts consideration provided that
made during the year. such transfer is made in the
ordinary course of business,
i.e.:
• a bona fide transaction;
• at arm’s length; and
• free from donative intent.

SL - 52 CONFIDENTIAL
Donor’s Tax
NIRC Provision NIRC TRAIN
Section 101 Dowries or gifts made on The exemption of dowries (gifts
Exemption of certain account of marriage by parents made on account of marriage)
gifts to each of their legitimate, is removed.
recognized, natural, or adopted
children to the extent of the first
₱10,000 shall be exempt from
donor’s tax.

SL - 53 CONFIDENTIAL
Value-Added Tax
Value-Added Tax
NIRC Provision NIRC TRAIN
Section 106 (A)(2) The following are entitled to The following sales by VAT-
Zero-rated sale of VAT zero-rating: registered persons shall be
goods or properties subject to zero percent 0%
rate:
1. The sale and actual
shipment of goods from the
Philippines to a foreign 1. The sale and actual
country, irrespective of any shipment of goods from the
shipping arrangement, and Philippines to a foreign
paid for in acceptable country, irrespective of any
foreign currency or its shipping arrangement, and
equivalent in goods or paid for in acceptable
services, and accounted for foreign currency or its
in accordance with the rules equivalent in goods or
of the BSP; services, and accounted for
in accordance with the rules
of the BSP;

SL - 55 CONFIDENTIAL
Value-Added Tax
NIRC Provision NIRC TRAIN
Section 106 (A)(2) 2. Sale and delivery of goods
Zero-rated sale of to:
goods or properties • Registered enterprises
within a separate
customs territory
• Registered enterprises
within enterprise zones

(The above provision was


vetoed by President Duterte
because this go against the
principle of limiting the VAT
zero-rating to direct
exporters.)

SL - 56 CONFIDENTIAL
Value-Added Tax
NIRC Provision NIRC TRAIN
Section 106 (A)(2) 2. Sale of raw materials or 3. Sale of raw materials or
Zero-rated sale of packaging materials to a packaging materials to a
goods or properties nonresident buyer for nonresident buyer for
delivery to a resident local delivery to a resident local
export-oriented enterprise export-oriented enterprise
to be used in to be used in
manufacturing, processing, manufacturing, processing,
packaging or repackaging packaging or repackaging
and paid for in acceptable and paid for in acceptable
foreign currency and foreign currency and
accounted for in accounted for in
accordance with the rules accordance with the rules
and regulations of the BSP; and regulations of the BSP;

SL - 57 CONFIDENTIAL
Value-Added Tax
NIRC Provision NIRC TRAIN
Section 106 (A)(2) 3. Sale of raw materials or 4. Sale of raw materials or
Zero-rated sale of packaging materials to packaging materials to
goods or properties export-oriented enterprise export-oriented enterprise
whose export sales exceed whose export sales exceed
seventy percent (70%) of seventy percent (70%) of
total annual production; total annual production;

4. Sale of gold to BSP;

SL - 58 CONFIDENTIAL
Value-Added Tax
NIRC Provision NIRC TRAIN
Section 106 (A)(2) 5. Those considered export 5. Those considered export
Zero-rated sale of sales under Executive sales under Executive
goods or properties Order No. 226, otherwise Order No. 226, otherwise
known as the Omnibus known as the Omnibus
Investment Code of 198, Investment Code of 198,
and other special laws; and other special laws; and
6. The sale of goods, supplies, 6. The sale of goods, supplies,
equipment and fuel to equipment and fuel to
persons engaged in persons engaged in
international shipping or international shipping or
international air-transport international air-transport;
operations; provided that the goods,
supplies, equipment and
fuel have been sold and
used for international
shipping and air-transport
operations;
SL - 59 CONFIDENTIAL
Value-Added Tax
NIRC Provision NIRC TRAIN
Section 106 (A)(2) Additional provision:
Items 3, 4, and 5 shall be subject
Zero-rated sale of to 12% VAT and no longer be
goods or properties considered export sales subject
to 0% VAT upon the satisfaction
of the following conditions:
• There is a successful
establishment and
implementation of an
enhanced vat refund system
that grants refunds of
creditable input tax within 90
days from the filing of the vat
refund application with the
Bureau
• All pending VAT refund claims
as of December 31, 2017 shall
be fully paid in cash by
December 31, 2019.

SL - 60 CONFIDENTIAL
Value-Added Tax
NIRC Provision NIRC TRAIN
Section 106 (A)(2) Deleted provision:
Zero-rated sale of The following shall no longer
goods or properties be subject to 0% VAT:
1. Sale of gold to BSP
2. Foreign-currency
denominated sales

SL - 61 CONFIDENTIAL
Value-Added Tax
NIRC Provision NIRC TRAIN
Section 108 (A) Sale or exchange of services Sale or exchange of services
Definition of sale or include “sales of electricity by include “sales of electricity by
exchange of services generation companies, generation companies,
transmission, and distribution transmission by any entity,
companies”. and distribution companies,
including electric
Cooperatives.

SL - 62 CONFIDENTIAL
Value-Added Tax
NIRC Provision NIRC TRAIN
Section 108 (B) The following are entitled to The following are entitled to
Zero-rated sale of VAT zero-rating: VAT zero-rating:
services 1. Processing, manufacturing 1. Processing, manufacturing
or repacking goods for other or repacking goods for other
persons doing business persons doing business
outside the Philippines outside the Philippines
which goods are which goods are
subsequently exported, subsequently exported,
where the services are paid where the services are paid
for in acceptable foreign for in acceptable foreign
currency and accounted for currency and accounted for
in accordance with the rules in accordance with the rules
and regulations of the and regulations of the
Bangko Sentral ng Pilipinas Bangko Sentral ng Pilipinas
(BSP); (BSP);

SL - 63 CONFIDENTIAL
Value-Added Tax
NIRC Provision NIRC TRAIN
Section 108 (B) 2. Services other than those 2. Services other than those
mentioned in the preceding mentioned in the preceding
Zero-rated sale of
paragraph rendered to a paragraph rendered to a
services person engaged in business person engaged in business
conducted outside the conducted outside the
Philippines or to a nonresident Philippines or to a nonresident
person not engaged in person not engaged in
business who is outside the business who is outside the
Philippines when the services Philippines when the services
are performed, the are performed, the
consideration for which is paid consideration for which is paid
for in acceptable foreign for in acceptable foreign
currency and accounted for in currency and accounted for in
accordance with the rules and accordance with the rules and
regulations of the Bangko regulations of the Bangko
Sentral ng Pilipinas (BSP); Sentral ng Pilipinas (BSP);

SL - 64 CONFIDENTIAL
Value-Added Tax
NIRC Provision NIRC TRAIN
Section 108 (B) 3. Services rendered to persons 3. Services rendered to persons
or entities whose exemption or entities whose exemption
Zero-rated sale of under special laws or under special laws or
services international agreements to international agreements to
which the Philippines is a which the Philippines is a
signatory effectively subjects signatory effectively subjects
the supply of such services to the supply of such services to
zero percent (0%) rate; zero percent (0%) rate;
4. Services rendered to persons 4. Services rendered to persons
engaged in international engaged in international
shipping or international air shipping or international air
transport operations, including transport operations, including
leases of property for use leases of property for use
thereof; thereof; provided, that these
services shall be exclusively for
international shipping or air
transport operations;

SL - 65 CONFIDENTIAL
Value-Added Tax
NIRC Provision NIRC TRAIN
Section 108 (B) 5. Services performed by 5. Services performed by
Zero-rated sale of subcontractors and/or subcontractors and/or
services contractors in processing, contractors in processing,
converting, or converting, or
manufacturing goods for an manufacturing goods for an
enterprise whose export enterprise whose export
sales exceed seventy sales exceed seventy
percent (70%) of total percent (70%) of total
annual production are no annual production are no
longer entitled to VAT zero- longer entitled to VAT zero-
rating. rating.

SL - 66 CONFIDENTIAL
Value-Added Tax
NIRC Provision NIRC TRAIN
Section 108 (B) 6. Transport of passengers 6. Transport of passengers
Zero-rated sale of and cargo by domestic air and cargo by domestic air
services or sea vessels from the or sea vessels from the
Philippines to a foreign Philippines to a foreign
country; country;
7. Sale of power or fuel 7. Sale of power or fuel
generated through generated through
renewable sourced of renewable sourced of
energy such as but not energy such as but not
limited to biomass, solar, limited to biomass, solar,
wind, hydropower, wind, hydropower,
geothermal, ocean energy, geothermal, ocean energy,
and other emerging energy and other emerging energy
sources using technologies sources using technologies
such as fuel cells and such as fuel cells and
hydrogen fuels hydrogen fuels

SL - 67 CONFIDENTIAL
Value-Added Tax
NIRC Provision NIRC TRAIN
Section 108 (B) 8. Services rendered to:
Zero-rated sale of • Registered enterprises
services within a separate customs
territory
• Registered enterprises
within tourism enterprise
zones

(Above provision was vetoed


by President Duterte)

SL - 68 CONFIDENTIAL
Value-Added Tax
NIRC Provision NIRC TRAIN
Section 108 (B) Additional provision:
Zero-rated sale of Items 1 and 5 shall be subject to
12% VAT and no longer be
services considered export sales subject
to 0% VAT upon the satisfaction
of the following conditions:
• There is a successful
establishment and
implementation of an
enhanced vat refund system
that grants refunds of
creditable input tax within 90
days from the filing of the vat
refund application with the
Bureau
• All pending VAT refund claims
as of December 31, 2017 shall
be fully paid in cash by
December 31, 2019.
SL - 69 CONFIDENTIAL
Value-Added Tax
NIRC Provision NIRC TRAIN
Section 108 Additional provision:
Zero-rated sale of The Department of Finance shall
goods or properties establish a VAT Refund Center in
the BIR and BOC that will handle
and zero-rated sale of
the processing and granting of
services cash refunds or creditable input
tax.

5% of the total VAT collection of the


BIR and BOC from the immediately
preceding year shall be
• automatically appropriated
annually
• treated as a special account in
the General Fund or as trust
receipts
to fund claims for VAT refund.
SL - 70 CONFIDENTIAL
Value-Added Tax
NIRC Provision NIRC TRAIN
Section 108 Additional provision:
Zero-rated sale of The BIR and BOC shall submit to
goods or properties the Congressional Oversight
Committee on the Comprehensive
and zero-rated sale of
Tax Reform Program a quarterly
services report of all pending claims for
refund and unused fund.

SL - 71 CONFIDENTIAL
Value-Added Tax
NIRC Provision NIRC TRAIN
Section 109 Sale of real properties not primarily Sale of real properties not primarily
held for sale to customers or held held for sale to customers or held for
VAT-exempt for lease in the ordinary course of lease in the ordinary course of trade
transactions trade or business or real property or business or real property utilized
utilized for low-cost and socialized for low-cost and socialized housing,
housing, residential lot valued at residential lot valued at ₱1,500,000
and below; house and lot, and other
₱1,919,500 and below; house and
residential dwellings valued at
lot, and other residential dwellings
₱2,500,000 and below.
valued at ₱3,199,200 and below.
Beginning January 1, 2021:
• the VAT exemption shall not
anymore apply to
– Sale of Low-cost housing
– Sale of residential lot
• The threshold selling price amount
for sale of house and lot, and other
residential dwellings shall be
₱2,000,000

SL - 72 CONFIDENTIAL
Value-Added Tax
NIRC Provision NIRC TRAIN
Section 109 (Q) Lease of a residential unit (Q) Lease of residential unit
VAT-exempt with a monthly rental not with monthly rental not
transactions exceeding ₱12,800 exceeding ₱15,000.

(U) Importation of fuel, goods (U) Additional proviso:


and supplies by persons
engaged in international
xxx Provided, That the fuel,
shipping or air transport
goods, and supplies shall be
operations.
used for international shipping
or air transport operations;

SL - 73 CONFIDENTIAL
Value-Added Tax
NIRC Provision NIRC TRAIN
Section 109 Additional exempt transactions:
VAT-exempt (W) Sale or lease of goods and
transactions services to senior citizens and
persons with disabilities;

(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;

SL - 74 CONFIDENTIAL
Value-Added Tax
NIRC Provision NIRC TRAIN
Section 109 (W) Sale or lease of goods or (Z) Sale of gold to the BSP
VAT-exempt properties or the performance of
sevices other than the
transactions (AA) Sale of drugs and
transactions specifically
mentioned as VAT-exempt, the medicines prescribed for
gross annual sales and/or diabetes, high cholesterol, and
receipts do not exceed the hypertension beginning January
amount of ₱1,919,500 (as 1, 2019
amended).
Now (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
₱3,000,000

SL - 75 CONFIDENTIAL
Value-Added Tax
NIRC Provision NIRC TRAIN
Section 110 (A)(2)(b) The input tax on the purchase Amortization of input VAT shall
Amortization of input of capital goods with a cost only be allowed until December
VAT from purchases of exceeding ₱1,000,000 shall be 31, 2021.
capital goods amortized based on its useful
life or 60 months, whichever is
After such date, taxpayers with
shorter.
unutilized input vat on capital
goods purchased or imported
shall be allowed to apply the
same as scheduled until fully
utilized.

SL - 76 CONFIDENTIAL
Value-Added Tax
NIRC Provision NIRC TRAIN
Section 112 The Commissioner shall grant a • The period of granting by the
Refunds or tax credits of refund or issue a tax credit Commissioner of refunds is
input VAT certificate for creditable input decreased to 90 days (from
taxes within 120 days from the 120 days) from the date of
date of submission of complete submission of complete
documents. documents in support of the
application.

• The granting of tax credit


instead of refund is removed.

Additional proviso:
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.
SL - 77 CONFIDENTIAL
Value-Added Tax
NIRC Provision NIRC TRAIN
Section 112 Failure on the part of the The deemed denial of failure to
Refunds or tax credits of Commissioner to act on the act on the application is
input VAT application within the period removed.
prescribed shall be deemed a
denial of the application.
Additional proviso:
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 the Tax Code (administrative
fine and imprisonment).

SL - 78 CONFIDENTIAL
Value-Added Tax
NIRC Provision NIRC TRAIN
Section 114 (A) VAT taxpayers shall file Beginning January 1, 2023, the
Return and payment of quarterly returns within 25 days filing and payment shall be
VAT following the close of each done within 25 days following
taxable quarter, while payment the close of each taxable
of the VAT shall be made on a quarter.
monthly basis upon filing of
monthly VAT declaratin.

SL - 79 CONFIDENTIAL
Other Percentage Taxes
Other Percentage Taxes
NIRC Provision NIRC TRAIN
Section 116 Cooperatives are exempt from Additional exemption:
3% gross receipts tax the 3% gross receipts tax.
of persons exempt Beginning January 1, 2019,
from the VAT self-employed and
professionals with total annual
gross sales and/or gross
receipts not exceeding
₱500,000 shall be exempt from
the 3% gross receipts tax.

(The above provision was


vetoed by President Duterte
because the proposed
exemption will result in
unnecessary erosion of
revenues and would lead to
abuse and leakages.)

SL - 81 CONFIDENTIAL
Other Percentage Taxes
NIRC Provision NIRC TRAIN
Section 127 Sale, barter or exchange of The rate of the stock
Stock transaction tax shares of stock listed and transaction tax is increased to
traded through the local stock 6/10 of 1%.
exchange shall be subject to a
tax of ½ of 1% of the gross
selling price or gross value in
money of the shares of stock
sold, bartered, exchanged or
otherwise disposed.

SL - 82 CONFIDENTIAL
Excise Taxes
Excise Taxes
NIRC Provision NIRC TRAIN
Section 129 Excise taxes apply to goods Excise tax shall also be
Goods and services manufactured or produced in imposed to services performed
subject to excise taxes the Philippines for domestic in the Philippines.
sales or consumption or for any
other disposition and to things
imported.

SL - 84 CONFIDENTIAL
Excise Taxes
NIRC Provision TRAIN
Section 145 (B) and Effective Tax
(C) Jan 1, 2018 – Jun 30, 2018 ₱32.50 per pack
Excise tax on Jul 1, 2018 – Dec 31, 2019 ₱35.00 per pack
cigarettes packed by Jan 1, 2020 – Dec 31, 2021 ₱37.50 per pack
hand and by machine Jan 1, 2022 – Dec 31, 2023 ₱40.00 per pack

The rates of excise tax shall be increased by 4% every year


effective January 1, 2024, through revenue regulations issued by
the Secretary of Finance.

Duly registered cigarettes packed by hand shall only be packed


in 20s [previously allowed in 30s] and other packaging
combinations of not more than 20.

SL - 85 CONFIDENTIAL
Excise Taxes
NIRC Provision NIRC TRAIN
Section 148 Manufactured Oils Effective
NIRC
and Other Fuels 1-Jan-2018 1-Jan-2019 1-Jan-2020
Excise tax on Lubricating oils and ₱ 4.50 ₱ 8.00 ₱ 9.00 ₱ 10.00
petroleum products greases (per liter)
Processed gas (per 0.05 8.00 9.00 10.00
liter)
Waxes and petroleum 3.50 8.00 9.00 10.00
(per kg)
Denatured alcohol 0.05 8.00 9.00 10.00
(per liter)
Naphtha, regular 4.35 7.00 9.00 10.00
gasoline, pyrolysis
gasoline and other
similar products of
distillation (per liter)*

*Provided that the production of petroleum products, whether or not classified as


products of distillation and use solely for production of gasoline shall be exempt from
excise tax.

SL - 86 CONFIDENTIAL
Excise Taxes
NIRC Provision NIRC TRAIN
Section 148 Manufactured Oils Effective
NIRC
and Other Fuels 1-Jan-2018 1-Jan-2019 1-Jan-2020
Excise tax on Leaded premium ₱ 5.35 No provision No provision No provision
petroleum products gasoline (per liter)
Unleaded premium 4.35 ₱ 7.00 ₱ 9.00 ₱ 10.00
gasoline (per liter)
Aviation turbo jet fuel 3.67 4.00 4.00 4.00
(per liter)
Kerosene (per liter) 0.00 3.00 4.00 5.00
Diesel fuel oil (per 0.00 2.50 4.50 6.00
liter)
Liquefied Petroleum 0.00 1.00 2.00 3.00
Gas (per liter)
Asphalt (per kg) 0.56 8.00 9.00 10.00
Bunker fuel oil (per 0.00 2.50 4.50 6.00
liter)
Petroleum coke (per No provision 2.50 4.50 6.00
metric ton)*
*Provided, however, that, petroleum coke, when used as feedstock to any power
generating facility, per metric ton, is ₱0.00

SL - 87 CONFIDENTIAL
Excise Taxes
NIRC Provision TRAIN
Section 148 Additional proviso:
Excise tax on Naphtha and pyrolisis gasoline will also be subject to zero excise tax
when used in the refining of petroleum products.
petroleum products
The production of petroleum products, whether or not they are classified
as products of distillation and for use solely for the production of gasoline
shall be exempt from excise Tax.

Liquefied petroleum gas when used as raw material in the production of


petrochemical products, subject to the rules and regulations to be
promulgated by the Secretary of Finance, shall be taxed zero per
kilogram.

The excise taxes paid on the purchased basestock (bunker) used in the
manufacture of excisable articles and forming part thereof shall be
credited against the excise tax due therefrom.

Petroleum coke is now subject to excise tax. But, when used as


feedstock to any power generating facility, it shall be taxed at zero per
metric ton.
SL - 88 CONFIDENTIAL
Excise Taxes
NIRC Provision TRAIN
Section 148 Additional proviso:
Excise tax on Zero excise tax for Petroleum products, including naphtha, LPG,
petroleum products petroleum coke, refinery fuel and other products of distillation,
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
plant

(The above provision was vetoed by President Duterte


because of the risk of being too general which may be
subject to abuse by taxpayers.)

SL - 89 CONFIDENTIAL
Excise Taxes
NIRC Provision NIRC TRAIN
Section 148-A No provision The Secretary of Finance shall
Marking of petroleum require the use of an official
products [new] fuel marking or similar
technology on petroleum
products that are refined,
manufactured or imported into
the Philippines, and that are
subject to the payment of taxes
and duties.

SL - 90 CONFIDENTIAL
Excise Taxes
NIRC Provision NIRC TRAIN
Section 148-A No provision Absence of official or dilution of
Marking of petroleum the official marker on petroleum
products [new] products shall raise the
presumption that the products
were withdrawn with the
intention to evade the payment
of the taxes and duties thereon.

The use of fraudulent marker


on the petroleum products shall
be considered prima facie
evidence that the same have
been withdrawn or imported
without the payment of taxes
and duties due thereon.

SL - 91 CONFIDENTIAL
Excise Taxes
NIRC Provision NIRC TRAIN
Section 149 Effective January 1, 2018:
Excise Tax
Excise tax on Over/Up to
Rate Excise Tax
Over/Up to
automobiles Up to 600,000 2% Rate
Over 600,000 12,000 + 20% Up to 600,000 4%
Up to 1,100,000 of value in Over 600,000 10%
excess of Up to 1,000,000
600,000 Over 1,000,000 20%
Over 1,100,000 112,000 + 40% Up to 4,000,000
Up to 2,100,000 of value in Over 4,000,000 50%
excess of
1,100,000 Hybrid vehicles shall be
Over 2,100,000 512,000 + 60% subject to 50% of the
of value in applicable taxes.
excess of
2,100,000
Purely electric vehicles and
pickups shall be exempt from
excise tax on automobiles.
SL - 92 CONFIDENTIAL
Excise Taxes
NIRC Provision NIRC TRAIN
Section 149 Hybrid electric vehicle — a
Excise tax on motor vehicle powered by
automobiles electric energy, with or without
provision for off-vehicle
charging, in combination with
gasoline, diesel, or any other
motive power, and one that
must be able to propel itself
from a stationary condition
using solely electric motor.

SL - 93 CONFIDENTIAL
Excise Taxes
NIRC Provision NIRC TRAIN
Section 150-A No provision Invasive cosmetic procedures,
surgeries, and body enhancements
On non-essential for aesthetic reasons shall be
services [new] subject to 5% excise tax based on
the gross receipts derived from
the performance of services, net of
excise tax and VAT.

Body enhancements shall refer to


those:
• Directed solely towards
improving, altering or enhancing
a patient’s appearance,
• That do not meaningfully
promote the function of the body
or prevent or treat illness or
disease.

SL - 94 CONFIDENTIAL
Excise Taxes
NIRC Provision NIRC TRAIN
Section 150-A The tax shall not apply to nor
On non-essential cover:
services [new] 1. 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
• a disfiguring disease,
tumor, virus or infection
2. Cases or treatments covered
by the National Health
Insurance Program

SL - 95 CONFIDENTIAL
Excise Taxes
NIRC Provision NIRC TRAIN
Section 150-B No provision Effective January 1, 2018:
On sweetened Tax (Per Liter
Basis of Volume
beverages [new]
Capacity)
Sweetened ₱ 6.00
beverages using
• purely caloric
sweeteners and
• purely non-caloric
sweeteners, or
• a mix of caloric
and non-caloric
sweeteners
Sweetened ₱ 12.00
beverages using
purely high fructose
corn syrup or in
combination with any
caloric or non-caloric
sweetener
SL - 96 CONFIDENTIAL
Excise Taxes
NIRC Provision NIRC TRAIN
Section 150-B No provision The rate of ₱6.00 shall not
On sweetened apply to sweetened beverages
beverages [new] using high fructose corn
syrup

Exempt: Sweetened
beverages using
1. purely coconut sap sugar
2. purely steviol glycosides

SL - 97 CONFIDENTIAL
Excise Taxes
NIRC Provision NIRC TRAIN
Section 150-B No provision Sweetened beverages – non-
On sweetened alcoholic beverages of any
beverages [new] constitution (liquid, powder, or
concentrates) pre-packaged
and sealed according to FDA
standards, containing caloric
and/or non-caloric sweeteners
added by the manufacturers.

SL - 98 CONFIDENTIAL
Excise Taxes
NIRC Provision NIRC TRAIN
Section 150-B No provision List of sweetened beverages
On sweetened (not exclusive):
beverages [new] 1. Sweetened juice drinks
2. Sweetened tea
3. All carbonated beverages
4. Flavored water
5. Energy and sports drink
6. Other powdered drinks not
classified as milk, juice, tea,
and coffee
7. Cereal and grain beverages
8. Other non-alcoholic
beverages that contain
added sugar

SL - 99 CONFIDENTIAL
Excise Taxes
NIRC Provision NIRC TRAIN
Section 150-B No provision Excluded products:
On sweetened 1. All milk products, including
beverages [new] plain milk, infant formula milk,
follow-on milk, and growing up
milk, powdered milk, ready to
drink milk and flavored milk,
fermented milk, soymilk, and
flavored soymilk
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 (with
or without added sugar)

SL - 100 CONFIDENTIAL
Excise Taxes
NIRC Provision NIRC TRAIN
Section 150-B (D)(2) No provision Penalties and fines for
misrepresentation or
Manufacturer’s or misdeclaration in the required
Producer’s Sworn Manufacturer’s or Producer’s
Statement Sworn Statement
• summary cancellation or
withdrawal of the permit to
engage in business as
manufacturer or importer of
sweetened beverages
• For corporation, association,
or partnership: fine of triple the
amount of deficiency taxes,
surcharges, and interest
• Criminal liability
• For non-resident: immediate
deportation after serving
sentence

SL - 101 CONFIDENTIAL
Excise Taxes
NIRC Provision NIRC TRAIN
Section 151
Mineral Products Tax Mineral Products Tax
Excise tax on mineral
products Coal and coke ₱10 per Domestic and Per metric
metric ton imported Coal and ton:
Nonmetallic mineral 2% coke,
and quarry notwithstanding any 2018 – ₱50
resources incentives granted 2019 – ₱100
Copper and other 2% in any law or special 2020 – ₱150
metallic minerals law
Gold and chromite 2% Nonmetallic mineral 4%
Indigenous 3% and quarry
petroleum resources
Copper and other 4%
metallic minerals
Gold and chromite 4%
Indigenous 6%
petroleum

SL - 102 CONFIDENTIAL
Excise Taxes
NIRC Provision NIRC TRAIN
Section 155 Manufacturers of articles Importers are likewise
Mandatory metering subject to excise tax shall required to provide themselves
devices provide themselves with with such Bureau-accredited
counting or metering devices to counting or metering devices to
determine as accurately as determine volume, quantity or
possible the volume, quantity, number of articles imported.
or number of the articles
produced, to be complied with
before commencement of
operations.

SL - 103 CONFIDENTIAL
Documentary Stamp Tax
Documentary Stamp Tax
Documents subject to DST NIRC TRAIN
Section 174 ₱1.00 on each ₱200.00 or ₱2.00 on each ₱200.00 or
Original issue of shares of fractional part thereof of the fractional part thereof of the
stock par value par value

Section 175 ₱0.75 on each ₱200 of ₱1.50 on each ₱200 or


Sale or transfer of shares or fractional part thereof of the fractional part thereof of the
certificates of stock par value par value

For no par value stock: 25% For no par value stock: 50%
of the DST paid upon original of the DST paid upon original
issue issue
Section 177 ₱0.50 on each ₱200 or ₱1.00 on each ₱200 or
Certificates of Profits or fractional part thereof of the fractional part thereof of the
Interest in Property or face value of the certificate or face value of the certificate or
Accumulations memorandum memorandum
Documentary Stamp Tax
Documents subject to DST NIRC TRAIN
Section 178 ₱1.50 on every document ₱3.00 on every document
Bank Checks, Drafts,
Certificates of Deposits not
bearing interest, and other
instruments
Section 179 ₱1.00 on each ₱200.00 or ₱1.50 on each ₱200.00 or
All Debt Instruments fractional part thereof of the fractional part thereof of the
issue price of debt instrument issue price of debt instrument
Section 180 ₱0.30 on each ₱200 or ₱0.60 on each ₱200 or
All Bills of Exchange or Drafts fractional part thereof of the fractional part thereof of the
face value face value
Section 181 ₱0.30 on each ₱200 or ₱0.60 on each ₱200 or
Acceptance of bills of fractional part thereof of the fractional part thereof of the
exchange and others face value face value
Documentary Stamp Tax
Documents subject to DST NIRC TRAIN
Section 182 ₱0.30 on each ₱200 or ₱0.60 on each ₱200 or
Foreign bills of exchange and fractional part thereof of the fractional part thereof of the
letters of credit face value face value
Section 183
Life Insurance Policies
Not over ₱100,000 Exempt Exempt
Over ₱100,000 but not over ₱10.00 ₱20.00
₱300,000
Over ₱300,000 but not over ₱25.00 ₱50.00
₱500,000
Over ₱500,000 but not over ₱50.00 ₱100.00
₱750,000
Over ₱750,000 but not over ₱75.00 ₱150.00
₱1,000,000
Over ₱1,000,000 ₱100.00 ₱200.00
Documentary Stamp Tax
Documents subject to DST NIRC TRAIN
Section 186 For policies of annuities – For policies of annuities –
Policies of Annuities and Pre- ₱0.50 on each ₱200 or a ₱1.00 on each ₱200 or a
need plans fractional part thereof of the fractional part thereof of the
premium or installment premium or installment
payment on contract price payment on contract price
collected collected

For pre-need plans – ₱0.20 For pre-need plans – ₱0.40


on each ₱200 or fractional on each ₱200 or fractional
part thereof of the premium or part thereof of the premium or
contribution collected contribution collected
Section 188 ₱15.00 on each certificate ₱30.00 on each certificate
Certificates
Section 189 ₱15.00 on each ₱30.00 on each
Warehouse receipts
Documentary Stamp Tax
Documents subject to DST NIRC TRAIN
Section 190 ₱0.10 on each ticket + ₱0.10 ₱0.20 on each ticket + ₱0.20
Jai-alai, Horse Race tickets, on every ₱1.00 or a fractional on every ₱1.00 or a fractional
lotto, or other authorized part thereof of the cost of the part thereof of the cost of the
number games ticket in excess of ₱1.00 ticket in excess of ₱1.00
Section 191
Bills of Lading or receipts
Goods: over ₱100 but not ₱1.00 ₱2.00
over ₱1,000
Goods: over ₱1,000 ₱10.00 ₱20.00
Section 192 ₱15.00 on each proxy ₱30.00 on each proxy
Proxies
Section 193 ₱5.00 on each power of ₱10.00 on each power of
Powers of Attorney attorney attorney
Documentary Stamp Tax
Documents subject to DST NIRC TRAIN
Section 194 ₱3.00 for the first ₱2,000 or ₱6.00 for the first ₱2,000 or
Leases and other Hiring fractional part thereof, + fractional part thereof, +
Agreements ₱1.00 every additional ₱2.00 every additional
₱1,000, for each year of the ₱1,000, for each year of the
term of said contract term of said contract
Section 195
Mortgages, Pledges and
Deeds of Trust
Amount secured:
Not over ₱5,000 ₱20.00 ₱40.00
On each ₱5,000 or ₱10.00 ₱20.00
fractional part thereof in
excess of ₱5,000
Documentary Stamp Tax
Documents subject to DST NIRC TRAIN
Section 196 No DST ₱15.00 for the first ₱1,000,
Deeds Donation of Real plus ₱15.00 for every
Property additional ₱1,000 or fraction
thereof of the consideration to
be paid or FMV, whichever is
higher

Transfers exempt from


donor’s tax:
Exempt from DST
Documentary Stamp Tax
Documents subject to DST NIRC TRAIN
Section 197 ₱500 if the registered gross ₱1,000 if the registered gross
Charter parties and similar tonnage is not over 1,000 tons tonnage is not over 1,000 tons
instruments plus ₱50 for every additional plus ₱100 for every additional
month or a fraction thereof in month or a fraction thereof in
excess of 6 months excess of 6 months
₱1,000 if the registered gross ₱2,000 if the registered gross
tonnage is over 1,000 tons but tonnage is over 1,000 tons but
not over 10,000 tons plus ₱100 not over 10,000 tons plus ₱200
for every additional month or a for every additional month or a
fraction thereof in excess of 6 fraction thereof in excess of 6
months months
₱1,500 if the registered gross ₱3,000 if the registered gross
tonnage exceeds 10,000 tons tonnage exceeds 10,000 tons
plus ₱150 for every additional plus ₱300 for every additional
month or a fraction thereof in month or a fraction thereof in
excess of 6 months excess of 6 months
Administrative Provisions
Administrative Provisions
NIRC Provision NIRC TRAIN
Section 232 All corporations, companies, All corporations, companies,
Keeping of books of partnerships, or persons partnerships, or persons
accounts required by law to pay internal required by law to pay internal
revenue taxes shall keep a revenue taxes shall keep and
journal and a ledger. use relevant and appropriate
set of bookkeeping records
duly authorized by the
Those whose quarterly sales,
Secretary of Finance.
earnings, receipts, or output do
not exceed ₱50,000 shall keep
and use simplified set of
bookkeeping records.

SL - 114 CONFIDENTIAL
Administrative Provisions
NIRC Provision NIRC TRAIN
Section 232 Those whose gross quarterly Those whose gross annual
Keeping of books of sales, earnings, receipts or sales, earnings, receipts or
accounts output exceed ₱150,000 shall output exceed ₱3,000,000
have their books of accounts shall have their books of
audited and examined yearly accounts audited and
by independent Certified Public examined yearly by
Accountants (CPAs) and their independent CPAs and their
ITRs accompanied with a duly ITRs accompanied with a duly
accomplished Account accomplished AIF.
Information Form (AIF).

SL - 115 CONFIDENTIAL
Administrative Provisions
NIRC Provision NIRC TRAIN
Section 236 The taxpayer’s registration Additional proviso:
Registration shall contain the information as The Commissioner shall
Requirements may be required by the simplify the business
Commissioner in the form registration and tax compliance
requirements of self-employed
prescribed individuals and/or
professionals.
Persons required to register for
VAT: those whose gross Threshold amount is increased
receipts to ₱3,000,000.

• for the past 12 months have


exceeded ₱1,500,000

SL - 116 CONFIDENTIAL
Administrative Provisions
NIRC Provision NIRC TRAIN
Section 236 • for the next 12 months can Additional proviso:
Registration be reasonably believe to Any taxable individual who
Requirements exceed ₱1,500,000 elects to pay the 8% tax on
gross sales or receipts shall
not be allowed to avail of
Any person not required to optional VAT registration.
register for VAT may elect to
register for VAT.

SL - 117 CONFIDENTIAL
Administrative Provisions
NIRC Provision NIRC TRAIN
Section 237 A duly-registered receipt or It is expressly provided that the
Receipts or Invoices sales or commercial invoice, issuance of the receipt or
prepared at least in duplicate, invoice shall be made at the
shall be issued for each sale of point of sale.
merchandise or service
rendered valued at ₱25 or
The threshold amount is
more.
increased to ₱100.00.

SL - 118 CONFIDENTIAL
Administrative Provisions
NIRC Provision NIRC TRAIN
Section 237 Additional provision:
Receipts or Invoices Within 5 years from the effectivity
of the law and upon the
establishment of the necessary
storing and processing system,
the following shall be required to
issue electronic receipts or
sales or commercial invoices in
lieu of manual receipts/invoices:
• taxpayers engaged in the
export of goods and services
• taxpayers engaged in e-
commerce, and
• taxpayers under the
jurisdiction of the Large
Taxpayers Service

SL - 119 CONFIDENTIAL
Administrative Provisions
NIRC Provision NIRC TRAIN
Section 237 Other taxpayers may also opt
Receipts or Invoices to issue electronic
receipts/invoices in lieu of
manual ones.

The digital record of electronic


receipts/invoices shall be kept
by the purchaser, customer or
client and the issuer for a
period of 3 years from the close
of the taxable year.

SL - 120 CONFIDENTIAL
Administrative Provisions
NIRC Provision NIRC TRAIN
Section 237 (A) No provision The taxpayers that will be
Electronic Sales mandated under Section 236 to
Reporting System issue electronic
[new] receipts/invoices shall be
required to electronically
report their sales data to the
BIR through the use of
electronic point of sales
systems.

The machines, fiscal devices,


and fiscal memory devices
shall be at the expense of the
taxpayers.

SL - 121 CONFIDENTIAL
Penalties
Penalties
NIRC Provision NIRC TRAIN
General Interest 20% interest on any unpaid General interest on unpaid
amount of tax from the date amount of tax is changed to
prescribed for payment until the 12% (at double the rate of legal
amount is fully paid interest rate for loans or
forbearance of any money in
the absence of an express
stipulation as set by the BSP;
prevailing BSP-set legal
interest is 6%)

Additional proviso:
Deficiency and delinquency
interest shall in no case be
imposed simultaneously.

SL - 123 CONFIDENTIAL
Penalties
NIRC Provision NIRC TRAIN
Deficiency interest Deficiency interest is assessed The period when deficiency
and collected from the date interest shall stop to run is until
prescribed for its payment until full payment OR upon issuance
full payment thereof. of a notice and demand by the
BIR Commissioner, whichever
comes earlier.

SL - 124 CONFIDENTIAL
Penalties
NIRC Provision NIRC TRAIN
Section 254 Any person who willfully Administrative Fine is
Attempt to evade or attempts in any manner to increased to not less than
defeat tax evade or defeat any tax ₱500,000 but not more than
imposed under this Code or the ₱10,000,000
payment thereof shall, in
addition to other penalties
Imprisonment is increased to
provided by law, upon
not less than 6 years but not
conviction thereof, be punished
more than 10 years
by a fine of not less than
₱30,000 but not more than
₱100,000 and suffer
imprisonment of not less than 2
years but not more than 4
years

SL - 125 CONFIDENTIAL
Penalties
NIRC Provision NIRC TRAIN
Section 264 Any person who: Same
Failure or refusal to • fails or refuses to issue
issue receipts or receipts/invoices
invoices • issues receipts/invoices that
do not truly reflect required
information
• uses multiple or double
receipts or invoices
shall upon conviction be
punished by a fine of not less
than ₱1,000 but not more than
₱50,000 and suffer
imprisonment of not less than 2
years but not more than 4
years

SL - 126 CONFIDENTIAL
Penalties
NIRC Provision NIRC TRAIN
Section 264 Fine of not less than ₱1,000 but Administrative Fine is increased
Failure or refusal to not more than ₱50,000 and to not less than ₱500,000 but
imprisonment of not less than 2 not more than ₱10,000,000
issue receipts or
years but not more than 4 years
invoices
for any person who: Imprisonment is increased to not
• Print receipts/invoices without less than 6 years but not more
authority from the BIR than 10 years
• Print double or multiple sets of
invoices or receipts Additional punishable offense:
• Print unnumbered Printing of other fraudulent
receipts/invoices not bearing receipts or sales or commercial
the name, business style, TIN invoices
and business address of the
entity

SL - 127 CONFIDENTIAL
Penalties
NIRC Provision NIRC TRAIN
Section 264-A No provision Any taxpayer required to
Failure to Transmit transmit sales data to the BIR’s
Sales Data Entered on electronic sales reporting
Cash Register system but fails to do so, shall
Machine/Point of Sales pay:
System (POS)
Machines to the BIR’s For each day of violation:
Electronic Sales
1/10 of 1% of the annual net
Reporting System
income as reflected in the
[new]
Audited FS for the second year
preceding the current taxable
year OR ₱10,000, whichever is
higher.

SL - 128 CONFIDENTIAL
Penalties
NIRC Provision NIRC TRAIN
Section 264-A No provision IF the aggregate number of
Failure to Transmit days of violation exceed 180
Sales Data Entered on days within a taxable year,
Cash Register additional penalty shall be:
Machine/Point of Sales permanent closure of the
System (POS) Taxpayer
Machines to the BIR’s
Electronic Sales The penalty shall not apply if
Reporting System the failure to transmit is due to
[new] force majeure or any causes
beyond the control of the
taxpayer

SL - 129 CONFIDENTIAL
Penalties
NIRC Provision NIRC TRAIN
Section 264-B No provision Covered person shall be any
person who purchase, use,
Sales suppression possess, sell or offer to sell, install,
devices [new] transfer, update, upgrade, keep, or
maintain such automated sales
suppression device or software
designed for or is capable of:
• Suppressing the creation of
electronic records of sale
transactions that a taxpayer is
required to keep under existing
tax laws and/or regulation; or
• Modifying, hiding, or deleting
electronic records of sales
transactions and providing a
ready means of access to them.

SL - 130 CONFIDENTIAL
Penalties
NIRC Provision NIRC TRAIN
Section 264-B No provision Penalty:
Sales suppression Administrative Fine of not less
devices [new] than ₱500,000 but not more
than ₱10,000,000 and
imprisonment of not less than
2 years but not more than 4
years.

Cumulative suppression of
electronic sales record in
excess of ₱50,000,000 shall be
considered as economic
sabotage and shall be subject
to maximum penalty.

SL - 131 CONFIDENTIAL
Penalties
NIRC Provision NIRC TRAIN
Section 265-A No provision Additional punishment for all
Offenses relating to offenses relating to fuel marking:
fuel marking a. Any person engaged in the
sale, trade, delivery,
distribution or transportation
of unmarked fuel in
commercial quantity held for
domestic use or merchandise
(upon conviction)
b. Any person who:
• causes the removal of the
official fuel marking agent
from marked fuel, and the
adulteration or dilution of
fuel intended for sale to the
domestic market, or

SL - 132 CONFIDENTIAL
Penalties
NIRC Provision NIRC TRAIN
Section 265-A No provision • knows the possession,
storage, transfer or offer for
Offenses relating to sale of fuel obtained as a
fuel marking result of such removal,
adulteration or dilution
First ₱2,500,000
offense
Second ₱5,000,000
offense
Third ₱10,000,000, plus
offense revocation of license to
engage in any trade or
business

SL - 133 CONFIDENTIAL
Penalties
NIRC Provision NIRC TRAIN
Section 265-A No provision c. Fine of not less than
Offenses relating to ₱1,000,000 but not more
than ₱5,000,000 AND
fuel marking
imprisonment of not less
than 4 years but not more
than 8 years for any person
who commits any of the
following acts:
• Making, importing, selling,
using or possessing fuel
markers without express
authority
• Making, importing, selling,
using or possessing
counterfeit fuel markers

SL - 134 CONFIDENTIAL
Penalties
NIRC Provision NIRC TRAIN
Section 265-A No provision d. Fine of not less than
Offenses relating to ₱5,000,000 but not more
than ₱10,000,000 AND
fuel marking
imprisonment of not less
than 4 years but not more
than 8 years for any person
who willfully inserts, places,
adds or attaches whatever
quantity of any unmarked
fuel, counterfeit additive or
chemical in the person,
house, effects, inventory, or
in the immediate vicinity of an
innocent individual for the
purpose of implicating,
incriminating or imputing the
commission of any violation
herein.
SL - 135 CONFIDENTIAL
Penalties
NIRC Provision NIRC TRAIN
Section 265-A No provision e. Any person authorized,
licensed or accredited to
Offenses relating to conduct fuel tests, who issues
fuel marking false or fraudulent fuel test
results knowingly, willfully, OR
through gross negligence, shall
suffer additional penalty of
imprisonment from 1 year and
1 day to 2 years and 6 months

Additional penalties that may be


imposed by the court:
• Revocation of the license to
practice profession In case of a
practitioner
• Closure of the fuel testing facility

SL - 136 CONFIDENTIAL
Penalties
NIRC Provision NIRC TRAIN
Section 269 No provision Additional punishable offense:
Violations committed (j) Deliberate failure to act on
by Government the application for VAT refunds
Enforcement Officers within the prescribed period.

SL - 137 CONFIDENTIAL
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