RONALD J M.

SERRANO TAX 1

INCOME TAX

DESCRIPTIO NATIONAL INTERNAL REVENUE CODE OF 1997 Effective

TRAIN LAW January 1, 2023 onwards:
N
INCOME TAX NOT over 10,000 5% The
NotIncome
Over tax rates
250, 000for Filipino citizes 0%
and Aliens
Tax rates for residing in the Philippines are the following:
the citizens Over 10, 000 But not over 500 + 10% of excess over
of the 30, 000 10, 000 Effective
Over on January
250, 0001, 2018
ButtoNot
December15%31,
of
Philippines Over 30, 000 But not over 2, 500 + 15% of excess 2022: Over 400, the excess
and Resident 70, 000 over 30, 000 000 over 250,
Alien of the Not 250, 5% But 000
not over
Over 70, 000 But not over 8, 500 + 20% of excess
Philippines over
Over 000
400,000 But not 22, 500 +
140, 000 over 70, 000
Over 250, But not 20% of 20%
over 800, excess
of over
Over 140, 000 But not over, 22, 500 + 25% excess
000 over 000 250, 000 the Excess
250, 000 over 140, 000
400, over 400,
Over 250, 000 But not over 50, 000 + 30% of excess 000 000
500, 000 over 250, 000 Over 400,
Over 800, 000But not 30, 000102,
But not + 25%
500of+
000 over over 2,
excess over 800,
25% of
Over 500, 000 125, 000 + 32% of excess 800, 000, 000
000 the excess
over 500, 000 000 over 800,
Over 800, But not 130, 000 + 30% of
000
Over 000
2, 000, over But
2, not
excess over 800,+
402, 500
000 000, over 8,
000 30% of
000 000, 000 the excess
Over 2, 000, But not 490, 000 + 32%
over 2, of
000 over 5, excess over 2, 000,
000, 000
over 8, 000, 000, 000 2, 202,
000 000 500 + 35%
Over 5, 000, 1, 450, of
000 + 35%
the
000 of excess over 5,
excess
000, 000over 8,
000, 00
RONALD J M. SERRANO TAX 1

Minimum Wage Definition and exemption of Minimum Wage Earners Definition of Statutory minimum wage and
Earners ( section 22 and section 24) statutotry minimum wage earner, including the
related provision on income tax exemption of
minimum wage earners has been removed
Self- Employed/ Under the old tax law, there were no specific provisions for  Self-employed and Professionals whose
Professionals self- employed individuals and/or professionals gross sales or gross receipts do not exceed
3, 000, 000 ,which is the VAT threshold ,
will be subject to 8% income tax on gross
sales or gross revenue in excess of 250,
000 in lieu of percentage tax
 Self- employed and/or Professionals whose
gross sales or gross receipts exceed that
VAT threshold of 3, 000, 000 will be
subjected to the graduated rates and can
no longer avail the 8% income tax rate and
will also be a subject o other business
taxes.

20% Final income Tax Exemption of PCSO and Lotto winnings Winnings from Philippine Charity
Swwepstakes and Lotto are only
exempted up to 10, 000; if it exceeds 10,
000, it shall be taxed 20%
RONALD J M. SERRANO TAX 1
Non-resident Alien Non-resident aliens who enjoy preferred income tax rates
Individual at 15% gross income/salaries, wages, compensation and
other emoluments.
Definition of Taxable "SECTION 31. Taxable Income Defined. — The term 'taxable
Income, income' means the pertinent items of gross income
specified in this Code, less the deductions and/or personal
and additional exemptions, if any, authorized for such
types of income by this Code or other special laws.‖
Exclusions from Gross (A) General Definition. - xxx
Income; Miscellaneous (B) Exclusions from Gross Income. – xxx (1) xxx
Items (7) Miscellaneous Items. -
Section 32(B)(7)(e) (a) xxx
(e) 13th Month Pay and Other Benefits. - Gross benefits
received by officials and employees of public and private
entities: Provided, however, That the total exclusion under
this subparagraph shall not exceed eighty-two thousand
pesos (P82,000) which shall cover:
SECTION 33. A final tax of thirty-four percent (34%) effective January 1,
Special Treatment of 1998; thirty-three percent (33%) effective January 1, 1999;
Fringe Benefit and thirty-two percent (32%) effective January 1, 2000 and
thereafter,
The grossed-up monetary value of the fringe benefit shall
be determined by dividing the actual monetary value of the fringe benefit by sixty-five percent (65%)
fringe benefit by sixty-six percent (66%) effective January 1, effective January 1, 2018 and onwards
1998; sixty-seven percent (67%) effective January 1, 1999;
and sixty-eight percent (68%) effective January 1, 2000 and
thereafter
Section 34- Deductions Same as the Old provision except the inclusion of the
from Gross Income provision that OSD may only be availed once, either by the a general professional partnership and its
general professional partnership or the partners
Increases the final income tax rate from
7.5% to 15% on interest income received
by an individual tax payer (EXCEPT non-
resident individualsn) from a depository
bank under foreign currency deposit
system.
Personal and Additional Exemption. –
Removes personal and additional
exemption from among the allowable
deductions to determine taxable income.
Exclusion from Gross Income of 13th
Month Pay and Other Benefits. –
Increases the amount of 13th month pay
and other benefits from gross income
which may be excluded from gross
income P82,000.00 to 90, 000
Fringe Benefit Tax (“FBT”) Rate. –
Increases the FBT rate from 32% to 35%.
The grossed-up monetary value of the
fringe benefit shall be determined by
dividing the actual monetary value of the
Optional Standard Deduction (“OSD”) for
partners. – RA 10963 inserted a provision
RONALD J M. SERRANO TAX 1

comprising the partnership, and the removal of the that OSD may be availed only once, either
deduction for premium payments on health and/or by the general professional partnership
hospitalization of an individual taxpayer of P2,400 per or the partners comprising the
family. partnership.

Non-deductibility of Premium Payments

on Health and/or Hospitalization
Insurance of an Individual Taxpayer. -
Removes premium payments on health
and/or hospitalization insurance(P2,400)
as an allowable deduction from gross
income of individual taxpayers.
SECTION 35. THE WHOLE PROVISION HAS BEEN REPEALED Repeal of Provision on Allowance of
Personal Exemption for Individual
Allowance of Personal Taxpayer. - Individual taxpayer is no
Exemption for longer allowed to claim basic personal
Individual Taxpayer. exemption or additional exemption for
dependents
SECTION 51-A. Doesn’t apply No ITR is required to be filed from an
Substituted Filing of employee if, first, an employee is
Income Tax Returns by receiving purely compensation income.
Employees Receiving Second, if an employee has one employer
Purely Compensation in the Philippines for the calendar year.
Income Lastly and the third, Employee’s income
(New Provision) has been with been withheld correctly by
the said employer (tax due equals tax
withheld))

The certificate of withholding filed by the

employer shall be equal with the
substituted filing of ITR by the taxpayer
SECTION 56. Deadline for paying the 2nd installment for taxes in excess Extends the deadline of the 2nd
of 2000 is on or before July 15 installment from July 15 to October 15
Payment and following the close of the calendar year in
RONALD J M. SERRANO TAX 1

case a taxpayer, except a corporation,

Assessment of Income elects to pay in 2 equal installment
Tax for Individuals payments.
and Corporations.

SECTION 74 Filing of declaration of estimated income for individual Extended of filing of declaration of
taxpayers for the current taxable year on or before April 15 estimated income for individual taxpayers
Declaration of income on the current taxable year from April 15
Tax for individuals to May 15 of the same taxable year
RONALD J M. SERRANO TAX 1

ESTATE TAXES
DESCRIPTION NCIR
SECTION 84 There shall be levied, assessed, collected and
paid upon the transfer of the net estate as
Rate of Estate Tax determined in accordance with Sections 85
and 86 of every decedent, whether resident or
nonresident of the Philippines, a tax based on
the value of such net estate, as computed in
accordance with the following schedule:
If the net estate is:
TRAIN LAW
TRAIN LAW now, has removed the
graduated rates for estate tax.
Furthermore, estate tax now has a
flat rate of 6% based on the value of
the net estate

over But not The Tax PLUS Of the excess

over shall be over
200, 000 Exempt
200, 000 500, 000 0 5% 200, 000
500, 000 2, 000, 15, 000 8% 500, 000
000

2, 000, 5, 000, 135, 000 11% 2, 000, 000

000 000

5, 000, 10, 000, 456, 000 15% 5, 000, 000

000 000

10, 000, And 1, 215, 000 20% 10, 000, 000

000 Over
RONALD J M. SERRANO TAX 1
SECTION 86.
Computation of Net Estate.
SECTION 89
Notice of Death to be Filed
SECTION 90
For the purpose of the tax imposed in this
Chapter, the value of the net estate shall be
determined:
(A) Deductions Allowed to the Estate of Citizen
or a Resident. - In the case of a citizen or
resident of the Philippines, by deducting from
the value of the gross estate -
(1) Expenses, Losses, Indebtedness, and Taxes.
- Such amounts -
n all cases of transfers subject to tax, or
where, though exempt from tax, the gross
value of the estate exceeds Twenty thousand
pesos (P20,000), the executor, administrator
or any of the legal heirs, as the case may be,
within two (2) months after the decedent's
death, or within a like period after qualifying
as such executor or administrator, shall give a
written notice thereof to the Commissioner.
(A) Requirements. - In all cases of transfers
subject to the tax imposed herein, or where,
1. Deductions allowed to the estate
of a citizen or a resident
• Funeral Judicial
Removes
Expenses and Expenses. – the
provision
Standard Deduction. – Increases the
amount of standard deduction from
P1,000,000 to P5,000,000.
• Family Home. – Increases the limit
of the value of the family home that
is allowed as deduction from
P1,000,000 to P10,000,000.
Furthermore, the amendment
removes the certification of the
barangay captain of the locality that
the family home is decedent’s family
home as sine qua non condition for
exemption or deduction.
• Medical Expenses. – Removes the
provision allowing deduction of
medical expenses from the gross
estate.
TRAIN Law has repealed Section 89,
which previously required the filing
of a notice of death
TRAIN Changed the following
requirements for estate tax returns
RONALD J M. SERRANO TAX 1

Estate Tax Returns though exempt from tax, the gross value of  Thos who are required to file:
the estate exceeds Two hundred thousand (A) Those who are subject
pesos (P200,000), or regardless of the gross to estate tax
value of the estate, where the said estate (B) Regardless of the
consists of registered or registrable property amount of the gross
such as real property, motor vehicle, shares of estate, where the
stock or other similar property for which a gross estate are
clearance from the Bureau of Internal registrable property
Revenue is required as a condition precedent that require a
for the transfer of ownership thereof in the Certificate Authorizing
name of the transferee, the executor, or the Registration from the
administrator, or any of the legal heirs, as the BIR as a condition
case may be, shall file a return under oath in precedent to the
duplicate, setting forth: transfer
 The threshold amount for the
(1) xxx; requirement if a CPA
(2) xxx; and statement is now 5, 000, 000
(3) Such part of such information as may at the
time be ascertainable and such supplemental
data as may be necessary to establish the
correct taxes.
Provided, however, That estate tax returns
showing a gross value exceeding Two million  The time for filing of the
pesos (P2, 000,000) shall be supported with a estate tax return is now year
statement duly certified to by a Certified from death.
Public Accountant containing the following:
xxx
(B) Time for Filing. - For the purpose of
determining the estate tax provided for in
Section 84 of this Code, the estate tax return
required under the preceding Subsection (A)
shall be filed within six (6) months from the
decedent's death.
xxx
RONALD J M. SERRANO TAX 1

SECTION 91 (C) Liability for Payment. - The estate tax
Payment of Tax imposed by Section 84 shall be paid by the
executor or administrator before delivery to
any beneficiary of his distributive share of the
estate. Such beneficiary shall to the extent of
his distributive share of the estate, be
subsidiarily liable for the payment of such
portion of the estate tax as his distributive
share bears to the value of the total net
estate.
TRAIN allows payment by installment
for estate tax
R.R. 12-2018 also allows the partial
disposition of estate and the
application of its proceeds to the
estate tax due

For the purpose of this Chapter, the term

'executor' or 'administrator' means the
executor or administrator of the decedent, or
if there is no executor or administrator
appointed, qualified, and acting within the
Philippines, then any person in actual or
constructive possession of any property of the
decedent.
RONALD J M. SERRANO TAX 1
SECTION 97.
Payment of Tax Antecedent to the
Transfer of Shares, Bonds or Rights.
Does not allow any withdrawal from the said
deposit account, except when the
Commissioner has certified that the taxes
imposed thereon has been paid
TRAIN allows the withdrawal of bank
deposits of dead person, subject to
the final withholding tax of 6%,
however, the withdrawal shall be
made within 1 year from the death
of the decedent.