PH Tax Reform - Christmas Gift to Filipinos
Happy New Year!!!
It’s official, the Philippine Government finally updated our tax
policies after more than 20 years!! Although you could still argue IT’S NOT
PERFECT but it is a step in the right direction not only for funding the
queueing government projects but also a relief to the overtaxed middle class of
this country.
I wrote last November 8th that this Tax Reform for Acceleration and
Inclusion Act (TRAIN) might be delayed, I was proven wrong. The Tax Reform was
signed by our President Rodrigo Duterte on December 19, 2017 and vetoed some
provisions right after.
LATEST UPDATE: The president has vetoed the following: (1) Php500k a
year exemption for self-employed and professionals from percentage tax; (2)
Earmarking of incremental tobacco taxes; (3) Exemption of various petroleum
products from excise tax; (4) Zero-rating of sales of goods and services to
separate customs territory and tourism enterprise zones; (5) Reduced income tax
rate of employees of Regional Headquarters (RHQS), Regional Operating
Headquarters (ROHQS), Offshore Banking Units (OBUS), and Petroleum Service
Contractors and Subcontractors.
As I mentioned in my last tax reform write-up, “I’m more inclined to talk about the ‘actual’ collections with the use
of technology across the tax collecting departments (BIR, Customs, SSS,
Philhealth, Pagibig) to name a few examples.
Civil Service Salaries in tax
collection departments may need to be updated and upgraded and perhaps even an
incentive system to mitigate graft and corruption. Imagine you are a tax collector
with a salary of 15-20k, tasked to collect millions. That sort of temptation is
enormous and real (unless if you are a saint).”
A quick summary of the Philippine
Tax Reform:
Income Tax
§
Current - Earning Php10k and below annually is
taxed at 5% while those earning above Php500k is subject to 32%
§
TRAIN - Tax exemption for those earning Php250k
annually while those earning above Php8M above is subject to 35%
Estate Tax
·
Current - Progressive rate at 5% with maximum of
20% but still subject to penalty fees and exemption of family home valued at Php1M
·
TRAIN - Flat rate of 6% and family home
exemption valued up to Php10M
Tobacco Tax
·
Current – under the sin tax law, the projected
tax rate will be Php31.20
·
TRAIN – transitional increase from 2018-2019
(Php35 from Jul 2018-Dec 2019; Php40 24 months) and 4% increase thereafter.
Tax on Sweetened Beverages
·
Current – None
·
TRAIN – Php6/liter for non/caloric sweeteners;
Php12/liter for high-fructose corn syrup
Tax on New Vehicles
·
Current – 2% for up to Php600k; Php12k + 40% of
excess over Php1.1M; Php512K + 60% of excess over Php2.1M
·
TRAIN – 4% for up to Php600K; 10% for Php600k to
1M; 20% for Php1 to 4M; 50% for above Php4M
Tax on Petroleum Products
·
Current – Zero for Diesel; while unleaded and
premium gasoline is at Php4.35 per liter
·
TRAIN –
§
For Diesel
o
Php2.5/liter (2018)
o
Php4.5/liter (2019)
o
Php6/liter (2020)
§
For Gasoline
o
Php7/liter (2018)
o
Php9/liter (2019)
o
Php10/liter (2020)
Although some groups might see this measure as a negative, saying that
the greater take home pay will be offset by the more expensive food and drinks
and transport costs, it’s a matter of PERSPECTIVE. You either have a solution
to every problem or always see a problem for every solution.
To me, this is an opportunity for Filipinos to be more financially
educated by spending, saving and investing their money wisely. What’s your
excuse?
--
PH Tax Reform - Christmas Gift to Filipinos
Reviewed by Vernon Joseph Go
on
Monday, January 01, 2018
Rating:
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