Rizal Technological University

College of Business and Entrepreneurial Technology

TAX REFORM FOR ACCELERATION AND INCLUSION

LAW ON ESTATE AND DONOR’S TAX

Submitted by:
Alvin A. Alcanar

Submitted to:
Dr. Elenita P. Sta.Ana

CBET-20-602E
SAT/4:30-7:30P
I. VIEWPOINT

As a student, the implementation of the Tax Reform for Acceleration and Inclusion
(TRAIN) law has further pushed those families under the poverty line down. Yes, the fact
remains that most are now tax free and some have higher take home pay, But the fact also
remains that salaries have not increased yet, while the prices of every commodity have increased

II. TIME CONTEXT

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 January 1, 2018.

The tax reform program is set to continue through 2019.

III. DEFINITION OF THE PROBLEM

The Tax Reform for Acceleration and Inclusion (TRAIN) Act, officially cited as Republic
Act No. 10963, is the initial package of the Comprehensive Tax Reform Program
(CTRP) signed into law by President Rodrigo Duterte on December 19, 2017 TRAIN
consists of revisions to the National Internal Revenue Code of 1997, or the Tax Code.
This reform includes packages that make changes in taxation concerning the personal
income tax (PIT), estate tax, donor's tax, value added tax (VAT), documentary stamp
tax (DST) and the excise tax of petroleum products, automobiles, sweetened
beverages, cosmetic procedures, coal, mining and tobacco.

In the first quarter of 2018, both positive and negative outcomes have been observed.
The economy saw an increase in tax revenues, government expenditure and an
incremental growth in GDP On the other hand, unprecedented inflation rates that
exceeded projected calculations has been the cause for much uproar and objections.
There have been petitions to suspend and amend the law, so as to safeguard particular
sectors from soaring prices.
 IV. OBJECTIVES

The TRAIN Act aims to address the reputed weaknesses of the Tax Code, specifically
through the following objectives:
 First, it intends to simplify the previous system to make it more straightforward and intuitive.

 Second, it intends to create a more "just" taxation scheme, wherein taxation is staggered and
distributed on the basis of financial capability and the underprivileged are able to reap more
advantages.

 Third, it intends to improve the efficiency by which tax is collected, particularly tackling issues
of compliance.

 Fourth, it increases the tax burden felt by the general population thus increasing the overall
inflation rate.

V. AREAS OF CONSIDERATION

How will they transition from VAT to Non-VAT? What will happen to their receipts?

RR 13-2018 implemented the new provisions on VAT and provided its transitory provisions.
According to the regulation, VAT-registered taxpayers that wanted to register as Non-VAT
needed to update their registration and surrender their unused invoices.

They will still be able to use their invoices as long as they indicate that they will no longer be
valid for claiming input taxes.

Taxpayers who wanted to continue as VAT taxpayers will be unable to cancel their VAT
registration for a period of three years.

RR 15-2018 and, later, 19-2018 imposed the deadline for VAT taxpayers to update their
registration to Non-VAT.
Other lesser-known provisions of the TRAIN Law also needed regulations to support them.
Among these are estate and donor’s taxes, the deductibility of expenses, the stock transfer tax
and the interest penalty.

VI. ALTERNATIVE COURSES OF ACTION

The main purpose of TRAIN law is to increase taxes on the commodities while lessening the
taxes being paid by the workers. It makes the tax system easier and more efficient.

The advantages of this are: (1) workers bring home more money than the before because the tax
is based on the salary you are getting and (2) there are enough funds for the government’s
projects.

The disadvantages of this are: (1) prices of the commodities may continue to rise, thus, the
inflation rate too and (2) the price hikes of commodities may lead to the further rising levels and
percentages of poverty and unemployment.

VII. RECOMMENDATION

Additional fiscal space provided by the first tax reform law would be enough to fund the
government’s programs and projects only until the third quarter, according to the Department
of Finance (DOF).
Package 1A includes the measure which reduces personal income taxes, raises the excise tax on
fuel, automobiles and imported coal and expands the value-added tax base, among others.

VIII. ACTION PLAN