TRAIN LAW

Tax Reform for Acceleration and Inclusion Law

ADVANTAGES DISADVANTAGES
Higher take home pay Higher household bills
Reduced personal income taxes Higher imposition of excise taxes on cars,
tobacco, sugar-sweetened beverages, and
fuel.
Raises significant revenue to fund the Higher fuel prices will have a trickle down
President’s priority and social infrastructure effect on public transport service providers,
programs to reduce poverty (Build, Build, therefore higher fares
Build projects)
Reduced estate and donor’s taxes to a flat rate The burden imposed on the companies will
of 6% regardless of the value of the net estate. just be passed on to the consumers
Simplified tax compliance (i.e., limiting Minimum wage earners and people with no
income tax returns to 4 pages and requiring fixed income will have a difficulty in coping up
quarterly rather than monthly filing for certain with the price increase
forms)
Amendments in VAT which lessen the burden Inflation in prices of goods and services
of taxpayers (i.e., increase of VAT threshold especially the essential commodities
from P1,919,500 to 3,000,000, sale of drugs
and medicines for diabetes, high cholesterol,
and hypertension will be exempt from VAT,
increase of Vat exemption from 12,800 to
P15,000, association dues, membership fees,
and other assessments and charges collected
by homeowners associations and
condominium corporations, sale of gold to
BSP, transfer of property in merger or
consolidation are now exempt)
More job opportunities, better infrastructure Increased taxes on certain passive incomes,
that will lower the transport and distribution documentary stamp tax
costs of goods, and improved services.

Up to 30% of the incremental revenues from Removed the tax exemption of Lotto and
the Train will help fund a targeted cash other PCSO winnings amounting to more than
transfer program for the country’s poorest 10 P10,000
million households to aid the bottom 50
percent of the population in coping with the
initial effects of the tax reform law on the
prices of basic necessities

Officials, agents, or employees of the BIR who
fail to act on the application for VAT refund
are now punished. The deemed denial of
failure to act on the application is removed.
Purely self-employed individuals and/or
Personal exemption of P50,000, additional
exemption of P25,000 per dependent child,
and the premium for health and
hospitalization insurance of P2,400 per year
were removed
Laying off of employees because of higher
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 professionals who do not exceed the VAT
threshold of P3M have now the option to be
taxed at 8% income tax on gross sales or gross
receipts in excess of P250,000 or income tax
based on the graduated income tax rates for
individuals.
Those earning P250,000 and below are tax
exempt. Wider tax bases.
Tax exemption of 13th month pay and other
benefits is increased from P82,000 to P90,000
Substituted filing of ITRs by employees
receiving purely compensation income from
only one employer, to ensure compliance in
tax procedures
Standard deduction in the estate tax is
increased from P1,000,000 to P5,000,000 for
resident or citizens and added a standard
deduction of P500,000 for non residents.
Deductions on family home increased from
P1,000,000 to P10,000,000
The threshold amount for the requirement of
attaching a statement duly certified by a CPA
is increased from P2,000,000 to P5,000,000
which is more practical.
The filing of estate tax returns is extended
from 6 months to 1 year from the decedent’s
death, thus making it more favorable to the
heirs.
There is now a payment by installment within
2 years from the statutory date of payment
without civil penalty and interest incase the
estate has no available cash or insufficient to
pay.
Withdrawal from the bank account of the
decedent is now allowed without the need of
the certification of the Commissioner,
however it is subject to FWT of 6%. This is
better and faster because BIR officials might
just sleep on the application.
Establishment of VAT Refund Centers in BIR
production costs (ex: Coke PH)
Foreign currency deposit units increased from
7.5 to 15-percent final tax on interest income.
Capital gains of non-traded stocks increased
from 5 to 10-percent to 15-percent final tax on
net gains only
Tax on petroleum products usually causes a
domino effect on prices of basic commodities,
public transport fares, services, and electricity
rates among others.
the data of 7.5 million who would no longer
pay taxes that the government kept on
mentioning appeared to have included
minimum wage earners who have long been
exempted from paying personal income tax
because of another law
Several VAT exemptions will be removed
‘Build Build Build’ is mainly about flagship
transport infrastructure projects concentrated
in the country’s highest-income regions
National Capital Region, Southern Tagalog
and Central Luzon with little for the poorest
regions in the rest of Luzon, Visayas and
Mindanao.
Capital gains tax increased from the 5/10% to
a flat rate of 15%
Tax on fringe benefits is increased from 32%
to 35%
Allowable deduction for premium payments
on health and/or hospitalization insurance is
removed
Beginning January 1, 2021, VAT exemptions
 and BOC offices no longer apply to sale of low-cost housing
and sale of residential lot.
The requirement to keep books of accounts
certified by CPAs is now being imposed to
those whose gross sales, earnings, receipts or
output exceed P3,000,000. Before it was
P150,000.
Threshold amount for self-employed
individuals and/or professionals is increased to
P3,000,000 from P1,500,000.
Electronic Sales Reporting System in keeping
with today’s modern technological age.
Monitoring of taxes are now easier and faster
for the BIR.

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