ARCH 159 PROF. ARMIN B.

SARTHOU
Republic Act No. 10963

TRAIN LAW
Tax Reform for Acceleration and Inclusion

ABELARDO, ANNE DANIELLE M.

CARBON, MARC DAVID L.
LOPEZ, FRANCIS GABRIEL R.
SAN ANTONIO, JOHN ROI DORUTHEO A.
OUTLINE
I. What is TRAIN Law?
II. History of TRAIN Law
III. TRAIN Law (IRR, Amendments)
IV. Pros & Cons of TRAIN Law
What is
TRAIN Law?
 “ A simple, fairer, and
more efficient tax system is needed to
promote investment, create jobs, and
reduce poverty. Not reforming the tax
system will deprive the poor of the
necessary social services and
infrastructure that can lift them out of
poverty and make them more
productive contributors to society.”

-Finance Secretary Carlos Dominguez III

COMPREHENSIVE TAX
REFORM PROGRAM
The Comprehensive Tax Reform Program (CTRP)
program is needed to accelerate poverty reduction Insert photo here
and to sustainably address inequality, in order to
attain the President’s promise of tunay na
pagbabago
COMPREHENSIVE TAX REFORM PROGRAM

PACKAGES

Package 1: Package 1B: Package 2: Package 2+:

TRAIN Tax Amnesty Corporate Income Sin Taxes
Tax and Incentives
Rationalization

Package 2+: Package 3: Package 4: Package 1C:

Mining Taxes Real Property Passive Income Motor Vehicle
Valuation and Financial User’s Charge
Taxes
COMPREHENSIVE TAX REFORM PROGRAM

PACKAGES
The Tax Reform for Acceleration and Inclusion (TRAIN) seeks to correct a
number of deficiencies in the tax system to make it simpler, fairer, and
more efficient.

Package 1: Corrects the longstanding inequity of the tax system by

TRAIN reducing income taxes for 99% of income taxpayers, giving
them much-needed relief after 20 years of non-adjustment
Raises revenues to fund the President’s priority
infrastructure programs
COMPREHENSIVE TAX REFORM PROGRAM

PACKAGES
The Tax Amnesty Act allows errant taxpayers affordably settle their
outstanding tax liabilities, allowing for a “fresh start,” while providing
the government with additional revenues for its priority infrastructure
and social programs. It also signals the start of a more aggressive tax
Package 1B:
Tax Amnesty enforcement campaign by tax authorities.
Estate tax amnesty
Tax amnesty on delinquencies
COMPREHENSIVE TAX REFORM PROGRAM

PACKAGES
Seeks to lower the corporate income tax (CIT) rate
gradually from 30% to 20%
Reorient fiscal incentives toward strategic growth
Package 2: industries
Corporate
Make incentives available to investors who make net positive
Income Tax and
contributions to society.
Incentives
Rationalization
COMPREHENSIVE TAX REFORM PROGRAM

PACKAGES
Ensure financial sustainability for health expenditure
programs under the Universal Health Care (UHC)

Discourage excessive alcohol and tobacco consumption

Package 2+:
Sin Taxes for better health and social outcomes

Ensure a world-class workforce

COMPREHENSIVE TAX REFORM PROGRAM

PACKAGES
Broaden the tax base used for property and property-related
taxes, increasing government revenues without increasing the
existing tax rates or devising new tax impositions
Improve the quality of valuation of local governments and make
Package 3:
the revisions frequent, efficient, transparent, reliable and
Real Property
Valuation attuned to market developments
Foster private investors’ confidence, and build the public’s trust
in the valuations of government
COMPREHENSIVE TAX REFORM PROGRAM

PACKAGES
Simplify taxation of passive income, financial services, and
transactions.
Rationalize the documentary stamp tax (DST) on financial
transactions to lessen friction cost and enhance taxpayer
Package 4:
compliance.
Passive Income
and Financial With Package 4 reform, the Philippines can be more competitive in
Taxes attracting capital and investments needed to finance large-scale
infrastructure, create more and better jobs, and boost economic growth.
COMPREHENSIVE TAX REFORM PROGRAM

PACKAGES
Provide adequate funding for the maintenance of national
and provincial roads
Also aims to address air pollution from motor vehicles

Package 1C:
Motor Vehicle
User’s Charge
History of
TRAIN Law
HOUSE OF

REPRESENTATIVES
SEPTEMBER 26 House Bill No. 4774 was endorsed by the Department of Finance to the
2016
Philippine House of Representatives
JANUARY
2017
17 Filed before the legislature on by Congressman Dakila Cua

Thirteen hearings were conducted within the span of four months, House Bill
No. 7890 was consolidated with 54 other tax-related bills to come up with a
House Bill No. 5636
8

MAY 29 The DOF requested President Duterte to declare the bill as "urgent"
2017
The bill passed the final reading with 246 voting for and 9 against the bill,
having only one abstention.
31
SENATE
MARCH A version of the bill was filed in the Senate by then-Senate President Koko
2017
Pimentel

MAY Six public hearings were conducted by the senate. The Senate had to wait for
2017 the House of Representatives version to get pass before it could start plenary
discussions.

The Senate voted 17-1 to approve the TRAIN bill, with Sen. Risa Hontiveros
being the lone dissenter.
NOVEMBER 28
2017
The Senate bill passed the third and final reading.
BICAMERAL CONFERENCE

COMMITTEE
11 Approved a bill which favored the Senate version and prepared a report
for ratification of both chambers of the Congress and signing of the President
DECEMBER
2017
13
The House of Representatives and the Senate ratified the version of the
bill prepared by the Bicameral Conference Committee
SIGNING INTO LAW
AND PARTIAL VETO

President Duterte exercised his veto power to

Insert photo here
void 5 provisions of the law.
SIGNING INTO LAW AND

PARTIAL VETO
Reduced income tax rate of employees of Regional Headquarters
1 (RHQs), Regional Operating Headquarters (ROHQs), Offshore Banking
Units (OBUs), and Petroleum Service Contractors and Subcontractors

Zero-rating of sales of goods and services to separate customs

2 territory and tourism enterprise zones

Exemption from percentage tax of gross sales/receipts not exceeding

3 five hundred thousand pesos (P500,000.00)
SIGNING INTO LAW AND

PARTIAL VETO
Exemption of various petroleum products from excise tax when
used as input, feedstock, or as raw material in the manufacturing of
4 petrochemical products, or in the refining of petroleum products, or as
replacement fuel for natural gas fired combined cycle power plants

5 Earmarking of incremental tobacco taxes

Question
Which is the primary text that
resulted to the TRAIN law?

a. HB 5636 c. HB 7890
b. HB 4774 d. HB 7159
Question
How many abstentions did the bill that
passed the final reading in the House of
Representatives receive?

a. Zero (0) c. Two (2)

b. One (1) d. Three(3)
TRAIN Law
(IRR, Amendments)
PERSONAL
INCOME TAX
RA 10963 restructures the personal income
tax (PIT) schedule, with separate schedules Insert photo here
for compensation income earners (CIES),
purely self-employed individuals and/or
professionals (SEPS) whose gross sales or
gross receipts and other non-operating
income do not exceed the Value-Added Tax
(VAT) threshold of P3 million and mixed
income earners
PERSONAL INCOME TAX
OLD TAX SCHEDULE NEW TAX SCHEDULE
For Compensation Income Earners
Effective January 1, 2018
NET TAXABLE INCOME NET TAXABLE INCOME
TAX RATE TAX RATE
OVER BUT NO OVER OVER BUT NO OVER

10000 5% 250000 0%

10000 30000 500 + 10% of excess over 10000 250000 400000 20% of excess over 250000

30000 70000 2500 + 15% of excess over 30000 400000 800000 30000 + 25% of excess over 400000

70000 140000 8500 + 20% of excess over 70000 800000 2000000 130000 + 30% of excess over 800000

140000 250000 22500 + 25% of excess over 140000 2000000 8000000 490000 + 32% of excess over 2000000

250000 500000 50000 + 30% of excess over 250000 8000000 2410000 + 35% of excess over 8000000

Effective January 1, 2023

500000 125000 + 32% of excess over 500000

NET TAXABLE INCOME

TAX RATE
OVER BUT NO OVER

250000 0%

250000 400000 20% of excess over 250000

400000 800000 30000 + 25% of excess over 400000

800000 2000000 130000 + 30% of excess over 800000

2000000 8000000 490000 + 32% of excess over 2000000

8000000 2410000 + 35% of excess over 8000000

PERSONAL INCOME TAX
OLD TAX SCHEDULE NEW TAX SCHEDULE
For Self-Employed and Professionals
Effective January 1, 2018
NET TAXABLE INCOME GROSS SALES/RECEIPTS TAX RATE
TAX RATE
OVER BUT NO OVER Not exceeding 3 Million Option 1: Regular PIT Rates or
Option 2: 8% of gross sales / receipts in
10000 5% excess of 250000

10000 30000 500 + 10% of excess over 10000 Above 3 Million Regular PIT Rates

30000 70000 2500 + 15% of excess over 30000

For Mixed Income Earners
Effective January 1, 2018
70000 140000 8500 + 20% of excess over 70000
TYPE OF INCOME TAX RATE
140000 250000 22500 + 25% of excess over 140000
Compensation Income Regular PIT rates
250000 500000 50000 + 30% of excess over 250000
Income from business or practice of Option 1: Regular PIT rates or
500000 125000 + 32% of excess over 500000 profession: Option 2: 8% gross sales/receipts
a. Gross sales/receipts not
exceeding 3 million Regular PIT Rates
b. Gross sales/receipts above 3
million
PERSONAL INCOME TAX

CHANGES
Reduces the number of tax brackets from 7 to 6

Exempts the first P250,000 annual taxable income of taxpayers

Sets the highest amount of taxable income at more than P8 million and
subjects it to a higher marginal rate of 35%

Repeals the provision on basic personal and additional exemptions and

premiums paid on health and/or hospitalization insurance which are deemed
integrated into the P250,000 exempt threshold
PERSONAL INCOME TAX

CHANGES
Retains the income tax exemption of minimum wage earners

Retains the exemption from tax of de minimis benefits as well as the non
taxability of mandatory contributions such as those made to the GSIS, SSS,
PhilHealth, Pag-IBIG Fund and union dues

Increases the amount of tax-exempt benefits ceiling (13th month pay and
other benefits) from P82,000 to P90,000

Imposes a 20% final tax on PCSO and lotto winnings exceeding PI0 000
PERSONAL INCOME TAX

CHANGES
Removes the preferential tax rate of 1 for employees of regional or area
headquarters, regional operating headquarters, offshore banking units and
petroleum service contractors and subcontractors

Increases the fringe benefits tax (FBT) rate from 52% to 35%

Inserts a provision that the Optional Standard Deduction by a general

professional partnership IGPP may only be availed once, either by the GPP or
the partners comprising nich partnership
ESTATE TAX
RA 10963 simplifies the estate tax schedule,
from a six-bracket schedule with ranging
from 5% to 20%, to a single rate of 6%
based on the value of net estate
ESTATE TAX
OLD TAX RATE NEW TAX RATE
NET ESTATE BRACKET TAX BASE TAX RATE
TAX RATE
OVER BUT NO OVER
Value of Net Estate 6%
200000 Exempt

200000 500000 5% of excess over 200000

500000 2000000 15000 + 8% of excess of 500000

2000000 5000000 135000 + 11% of excess over 2000000

5000000 10000000 465000 + 15% of excess over 5000000

10000000 1215000 + 20% of excess over 10000000

ESTATE TAX

CHANGES
Removes the deductions from gross estate pertaining to actual funeral
expenses or 5% of the gross estate, whichever is lower; judicial expenses;
and medical expenses but increased the amount of standard deduction from
5 Million P1 million to P5 million

Increases the amount of deduction for family home from up to P1 million to

up to P10 million and removes the sine qua non condition for the exemption
or deduction, that the family home must have been the decedent's family
10 Million home as certified by the barangay captain of the locality
ESTATE TAX

CHANGES
Removes the deductions for nonresident estates pertaining to expenses,
losses, indebtedness, and taxes but provides for a standard deduction
amounting to PhP500,00
500 K
Deletes the provision that requires executor, administrator or anyone of the
heirs to include in the estate tax return that part of the nonresident aliens
gross estate not situated in the Philippines to be able to claim deductions

Increases the amount of gross value of estate provided in estate tax returns
that requires to be supported with a statement duly certified by a Certified
Public Accountant (CPA) from P2 million to P5 million
5 Million
ESTATE TAX

CHANGES
Filing of Notice of Death

Repeals the provision requiring filing of notice of death of the by his/her

executor, administrator or any of the legal heirs within two months after the
decedent’s death

Deadline of Filing

Extends period within which the estate tax return should be filed, from 6
months 1
year from the decedent's death
ESTATE TAX

CHANGES
Payment on Installment Basis

Provides for the payment by installment basis in case available cash is

insufficient to pay the estate tax due. Payment shall be allowed within 2 years
from the statutory date for its payment without civil penalty and interest

Withdrawal Limit

Removes the P20, 000 limit that may be withdrawn from the bank account of
the decedent without certification from the BIR and allows for the withdrawal
of any amount but subject to a final withholding tax 6%
DONOR TAX
RA 10963 simplifies the donor's tax schedule
from an eight-bracket schedule with rates Insert photo here
ranging from 2% to 15% to a single rate of
6% of total gifts in excess of P250,000. The
6% tax rate likewise applies if the donee is
a stranger.
DONOR’S TAX
OLD TAX SCHEDULE NEW TAX RATE

NET GIFTS BRACKET TAX BASE TAX RATE

TAX RATE
OVER BUT NO OVER
Total gifts not exceeding Exempt
250000
100000 Exempt
In excess of 250000 6%
100000 200000 2% of excess over 100000

200000 500000 2000 + 4% of excess over 200000

500000 1000000 14000 + 6% of excess over 500000

1000000 3000000 44000 + 8% of excess over 1000000

3000000 5000000 204000 + 10% of excess over 3000000

5000000 10000000 404000 + 12% of excess over 5000000

10000000 1004000 + 15% of excess over 10000000

DONOR TAX

CHANGES
Inserts an additional provision under Section 100 of the NIRC of 1997, as
amended, which provides that a bona fide, at arm's length and donative-intent
free sale, exchange or other transfer of property made in the ordinary course
of business shall be considered as made for an adequate and full
consideration in money or money's worth and is therefore not subject to the
donor's tax

Deletes the provision exempting from the donor's tax dowries or gifts made
by parents to each of their legitimate, recognized natural, or adopted children
on account of marriage
VALUE
ADDED TAX
BROADENING THE VAT DATABASE

RA 10963 repeals 54 provisions on VAT exemption Insert photo here

and zero-rating under special laws to broaden the
VAT Database

It also includes electric cooperatives in the

definition of sale or exchange of of services
subject to VAT
VALUE-ADDED TAX

CHANGES
WITHDRAWAL OF ZERO-RATED TRANSACTIONS

RA 10963 removes foreign currency denominated sales from VAT zero-rating

and subjects to the VAT indirect exporters and agents only upon the
establishment and implementation of an enhanced VAT refund system.

- Foreign Currency Denominated Sales - Indirect Exporters and Agents

VALUE-ADDED TAX

CHANGES
RETENTION OF VAT EXEMPTIONS

RA 10963 retains the VAT-exempt status of the following

- Raw Agricultural & Marine Products - Health Services

- Educational Services - Cooperatives

- Senior Citizens - Persons with Disabilities

VALUE-ADDED TAX

CHANGES
INCLUSION TO VAT-EXEMPT TRANSACTIONS

RA 10963 includes following transactions to the list of VAT exempt

transactions under Section NIRC 1997:

- Sale of gold to the Bangko Sentral Pilipinas

- Sale of drugs medicines prescribed for diabetes, high cholesterol, and

hypertension, beginning January 2019
VALUE-ADDED TAX

CHANGES
INCLUSION TO VAT-EXEMPT TRANSACTIONS

- Association dues, membership fees, and other assessments and charges

Collected by homeowners’ associations and condominium corporations

- Transfer of property in pursuance of a plan merger or consolidation

VALUE-ADDED TAX

CHANGES
ADJUSTMENT TO VAT-EXEMPT THRESHOLDS

Increases the VAT-exempt threshold from P 1, 919, 500 to P3 million which is

to be adjusted to inflation not later than January 31, 2021 and every 3 years
thereafter

Increases the present VAT-exempt threshold on lease of residential unit with a

monthly rental of P12,800 to P15,000.

Reduces the VAT-exempt threshold from P 3, 199, 200 to P 2, 000, 000 on

sale of house and lot and other residential dwellings beginning January 1,
2021.
EXCISE TAX ON
AUTOMOBILES
RA 10963 restructures the tax schedule on
the excise tax on automobiles by imposing Insert photo here
ad valorem tax rates that are directly
applied to the net manufacturer's
price/importer's selling price instead of
imposing marginal tax rates
EXCISE TAX ON AUTOMOBILES
OLD TAX SCHEDULE NEW TAX RATE

NET MANUFACTURER’S PRICE/ TAX RATE NET MANUFACTURER’S TAX RATE

IMPORTER’S SELLING PRICE PRICE/ IMPORTER’S SELLING
PRICE
Up to 600 2%
Up to 600000 4%
Over 600000 to 1100000 12000 + 20% of value in excess of
600000 Over 600000 to 1000000 10%

Over 1100000 to 2100000 112000 + 40% of value in excess of Over 1000000 to 4000000 20%
1100000
Over 4000000 50%
Over 2100000 512000 + 60% of value in excess of
2100000
EXCISE TAX

AUTOMOBILES
NOTES:

Hybrid vehicles or vehicles powered by electric energy in combination with

gasoline, diesel or any other motive power shall be subject to 50% of the
applicable excise tax rates on automobiles

Purely electric vehicles shall be exempt from excise tax on automobiles

Pick-ups shall be considered as trucks

The term was deleted from the definition of jeep/jeepney/jeepney substitutes

which shall now read as jeepney/jeepney substitutes
Question 1
The following changes in personal
tax are correct except
a. Reduced number of tax c. Increases the fringe
brackets benefits tax (FBT) rate
from 52% to 35%
b. 25% final tax on PCSO and d. Retains the income
lotto winnings exceeding tax exemption of
PI0 000 minimum wage earners
Question 2
What is the new estate tax rate?

a. 7% of Value of Net c. 6% of Value of

Estate Net Estate

b. 4% of Value of Net d. 5% of Value of

Estate Net Estate
EXCISE TAX ON
PETROLEUM
PRODUCTS
RA 10963 increases the tax rates on petroleum products Insert photo here
in three (3) tranches beginning January 1, 2018 to
January 1, 2020
EXCISE TAX ON PETROLEUM PRODUCTS
NEW TAX SCHEDULE
OLD TAX NEW TAX RATES ( Per Liter/kg)
PETROLEUM PRODUCTS RATES (Per
Liter/kg) 2018 2019 2020

Lubricating oils and greases 4.50 8.00 9.00 10.00

Processed gas 0.05 8.00 9.00 10.00

Waxes and petrolatum 3.50 8.00 9.00 10.00

Denatured alcohol used for motive power 0.05 8.00 9.00 10.00

Naphtha and regular gasoline 4.35 7.00 9.00 10.00

Leaded gasoline 5.35 N/A N/A N/A

Unleaded gasoline 4.35 7.00 9.00 10.00

Aviation turbo jet fuel 3.67 4.00 4.00 4.00

Kerosene 0.00 3.00 4.00 5.00

Diesel fuel oil 0.00 2.50 4.50 6.00

Liquified petroleum gas 0.00 1.00 2.00 3.00

Asphalts 0.56 8.00 9.00 10.00

Bunker fuel oil 0.00 2.50 4.50 6.00

Petroleum coke N/A 2.50 4.50 6.00

EXCISE TAX

PETROLEUM PRODUCTS
For the period 2018 to 2020, the scheduled increase in the excise tax on fuel
shall be suspended for 3 months prior to the increase of the month when the
average Dubai crude oil price based on Mean of Platts Singapore (MOPS)
reaches or exceeds US$ 80 per barrel.
EXCISE TAX ON
SWEETENED
BEVERAGES
6 php/ liter of volume capacity Insert photo here
Tax on sweetened beverages using purely caloric sweeteners and
purely non-caloric sweeteners, or a mix of caloric and
non-caloric sweeteners

12 php/ liter of volume capacity

Tax on sweetened beverages using purely high fructose
corn syrup or in combination with any caloric or non
caloric sweetener
EXCISE TAX

SWEETENED BEVERAGES
BEVERAGES COVERED BEVERAGES EXCLUDED
Sweetened Juice Drinks All milk products, including Plain Milk, Infant Formula
Milk, Powdered Milk, etc.
Sweetened Tea
Meal Replacement and Medically Indicated
Flavored Water Beverages

All Carbonated Beverages Ground Coffee, Instant Soluble Coffee and

Pre-packaged Powdered Coffee Products
Energy and Sports Drinks
100% Natural Vegetable Juices
Cereal and Grain Beverages
100% Natural Fruit Juices
Other Powdered Drinks not classified
as Milk, Juice, Tea or Coffee

Other non alcoholic beverages, that

contain added sugar
 EXCISE TAX
CIGARETTES
Insert photo here
PER PACK
TOBACCO PRODUCTS

JAN 1, JAN 1, JAN 1, JAN 1, JAN 1, JAN 1,

OLD TAX
2013 2014 2015 2016 2017 2018

Cigarettes packed by hand 12.00 15.00 18.00 21.00 30.00 To be

SCHEDULE
increased
Cigarettes packed by machine by 4%
every year
thereafter
NRP 11.50 and below 12.00 17.00 21.00 25.00
30.00
NRP more than 11.50 25.00 27.00 28.00 29.00

PER PACK
TOBACCO PRODUCTS

NEW TAX
JAN 1, JUL 1, JAN 1, JAN 1, JAN 1, 2018
2018 2018 2020 2022

SCHEDULE Cigarettes packed by hand

Cigarettes packed by machine

32.50

32.50
35.00

35.00
37.50

37.50
40.00

40.00
To be increased
by 4% every year
thereafter
 EXCISE TAX
MINERAL
PRODUCTS
COAL AND COKE
MINERAL PRODUCT PER METRIC TON Insert photo here
OLD TAX RATE Coal and Coke 10.00

PER METRIC TON

NEW TAX RATE

MINERAL PRODUCT
2018 2019 2020

Coal and Coke 50.00 100.00 150.00

OTHER MINERAL PRODUCTS

MINERAL PRODUCT OLD TAX RATE NEW TAX RATE

All metallic minerals and quarry 2% 4%

resources

NEW TAX RATE Copper and other metallic minerals 2% 4%

Gold and chromite 2% 4%

Indigenous petroleum 3% 6%
DOCUMENTARY
STAMP TAX
RA 10963 increases the DST rates by 100% except the Insert photo here
DST on debt instruments (Section 179) which only
increases by 50% and the DST on policies of insurance
upon property (Sec. 184), fidelity bonds and other
insurance (Sec. 185), indemnity bonds (Sec. 187), and
deeds of sale, conveyances and donation of real property
(Sec. 196) which remained unchanged.
DOCUMENTARY STAMP TAX
SECTION IN DOCUMENT/
TAX CODE INSTRUMENT/ TAX BASE OLD TAX RATE NEW TAX RATE
TRANSACTION

174 Original Issue of Shares of Stock Par Value 1.00 on each 0.50% 2.00 on 1.00%
200 each 200

175 Sales, Agreements to Sell,

Memoranda of Sales, Deliveries or
Transfer of Shares/ Certificates of
Stock

With Par Value Par Value 0.75 on each 0.38% 1.50 on 0.75%
200 each 200

Without Par Value DST of original 25% 50%

issue

Listed shares of stocks at PSE - Exempt Exempt

176 Bonds, Debentures, Certificates of Par Value Tas as required by law Tas as required by law
Stock or Indebtedness Issued in
Foreign Countries

177 Certificates of Profits or Interest in Face Value 0.50 on each 0.25% 1.00 on 0.50%
Property of Accumulations 200 each 200

178 Bank Checks , Drafts, Certificates of Per Instrument 1.50 3.00

Deposit not Bearing Interest and
Other Instruments

179 Original Issue of all Debt Instruments Issue Price 1.00 on each 0.50% 1.50 on 0.75%
200 each 200

180 All Bills of Exchange or Drafts Face Value 0.15% 0.60 on 0.30%
each 200

181 Upon Acceptance of Bills of Exchange Face Value 0.30 on each 0.15% 0.60 on 0.30%
and Others 200 each 200

182 Foreign Bills of Exchange and Letters of Face Value 0.30 on each 0.15% 0.60 on 0.30%
Credit 200 each 200
DOCUMENTARY STAMP TAX
SECTION IN DOCUMENT/
TAX CODE INSTRUMENT/ TAX BASE OLD TAX RATE NEW TAX RATE
TRANSACTION

183 Life Insurance Policies Amount of 10-100 20-200

Insurance

184 Policies of Insurance upon Property Premium 0,50 on each 12.50% 0,50 on 12.50%
4.00 each 4.00

185 Fidelity Bonds and Other Insurance Premium 0,50 on each 12.50% 0,50 on 12.50%
Policies 4.00 each 4.00

186 Policies of Annuities or Other Premium/Installmen 0.50 on each 0.25% 1 on each 0.50%
Instruments t payment/ Contract 200 200
Price

186 Pre-need Plans Premium 0.20 on each 0.10% 0.40 on 0.20%

200 each 200

187 Indemnity Bonds Premium 0.30 on each 7.50% 0.30 on 7.50%

4.00 each 4.00

188 Certificates Per Certificate 15 30

189 Warehouse Receipts Per Warehouse 15 30

Receipt

190 Jai-Alai, Horse Racing Tickets, Lotto Per Ticket 0.10; additional 0.10 on each 1.00 0.20; additional 0.20 on each 1.00
or Other Authorized Number Games if ticket exceeds 1.00 if ticket exceeds 1.00

191 Bills of Lading or Receipts Value 1 if value >100 or 10 of value 2 if value > 100 or 20 if value >
>1000 1000

192 Proxies Per Instrument 15 30

DOCUMENTARY STAMP TAX
SECTION IN DOCUMENT/
TAX CODE INSTRUMENT/ TAX BASE OLD TAX RATE NEW TAX RATE
TRANSACTION

193 Powers of Attorney Per Instrument 5 10

194 Leases and Other Hiring Agreements Value 3 for 1st 2000 6 for 1st 2000
1 for each next 1000 2 for each next 1000

195 Mortgages, Pledges and Deeds of Amount Secured 20 for 1st 5000; 10 for each next 40 for 1st 5000; 20 for each next
Trust 5000 5000

196 Deeds of Sale, Conveyances and Value 15 for 1st 1000; 15 for 1st 1000;
Donation of Real Property 15 for each next 1000 15 for each next 1000

197 Charter Parties and Similar Gross Tonnage 500-1500 1000-3000

Instruments

198 Assignments and Renewals of Certain Same as Original Same rate as original Same rate as original
Instruments
OTHER TAXES
FOREIGN CURRENCY DEPOSIT UNIT (FCDU)

RA 10963 increases the final tax imposed on interest Income derived by an

individual (except a nonresident individual) and a domestic corporation from a
depository bank under the expanded foreign currency deposit system from
7.5% to 15%. The law, however, retains the 7.5% final tax on such interest
income of a resident foreign corporation.
OTHER TAXES
CAPITAL GAINS OF NON-TRADED STOCKS

RA 10963 increases the 5%-10% tax rates to a 15% single tax rate on net
capital gains realized by an individual and a domestic corporation from the
sale, barter, exchange or other disposition of shares of stock in a domestic
corporation that are not traded in the local stock exchange. The law, however,
retains the 5%-10% capital gains tax of a resident foreign corporation and
nonresident foreign corporation.
OTHER TAXES
STOCK TRANSACTIONS TAX (STT)

RA 10963 increases STT from 0.5% to 0.6% of the gross selling price or
gross value in money of the shares of stock sold, bartered, exchanged, or
otherwise disposed through the local stock exchange.
OTHER TAXES
COSMETIC PROCEDURES

RA 10963 levies a new excise tax equivalent 5% gross net of excise tax and
VAT, derived from performance of services on invasive cosmetic procedures,
surgeries, and body enhancements directed solely towards improving altering,
enhancing the patient's appearance.
TAX

ADMINISTRATION REFORM
Fuel Marking

Provides for fuel marking of petroleum products that are refined,

manufactured, imported into the Philippines, and that are subject to the
payment of taxes and duties and provides for the mechanism on how fuel
marking will be done including imposition of penalties for possible violations.
TAX

ADMINISTRATION REFORM
Registry of Petroleum Manufacturers and Importers

Requires the DOF to maintain a registry of all petroleum manufacturers

and/or importers and the articles manufactured and/or imported by them
including real-time inventory of such products in storage depots.
TAX

ADMINISTRATION REFORM
Tax Incentive Report

Requires the submission by the Cooperative Development Authority to the BIR

and of a tax incentive report which shall contain information on the income
tax, VAT, other tax incentives availed of by cooperatives enjoying incentives
under RA 6938 amended.
TAX

ADMINISTRATION REFORM
Income Tax Returns

Sets the maximum number of pages of the income tax returns of individuals
and corporations to a maximum of 4 pages, in paper or electronic form, and
the information that they should contain
TAX

ADMINISTRATION REFORM
VAT Refund Centers

Requires the establishment of VAT refund centers in the BIR and in the BOC
and the earmarking of 5% of the total VAT collection for the purpose of
funding claims for VAT refund.
TAX

ADMINISTRATION REFORM
Zonal Values

Inserts a provision on the automatic adjustment of zonal values once every 3

years and the publication or posting requirement in order for the said
adjustment in zonal valuation to be valid.
TAX

ADMINISTRATION REFORM
Sweetened Beverages

The Food and Drug Administration (FRA) shall require all manufacturers and
importers of sweetened beverages covered by the law to put the required
labeling with unique identification of excisable sweetened beverages.
TAX

ADMINISTRATION REFORM
Audit Threshold

Provides for electronic sales reporting system for taxpayers engaged in the
export of goods and services and Large Taxpayers at their own expense within
5 years from the effectivity of the Act.
TAX

ADMINISTRATION REFORM
Electronic Sale Reporting System

Increases the threshold amount required to be examined and audited by

independent CPAs, from gross quarterly sales, earnings, receipts or output of
more than P150,000 to gross annual sales, earnings, receipts or output of
more than P 3,000,000. It also removes the threshold before taxpayers are
required to keep books of accounts.
TAX

ADMINISTRATION REFORM
Electronic Receipts

Requires the issuance of electronic receipts or electronic sales/commercial

invoices in lieu of the manual receipts and sales/commercial invoices for
taxpayers engaged in the export of goods and services, e-commerce and the
Large Taxpayers within 5 years from the effectivity of this Act and upon
establishment of a system capable of storing and processing the required
data.
Question
Which of the following beverages
are excluded from excise tax?

a. Sweetened Tea c. Flavored Water

b. Coffee d. Grain
Question
When did the increase of tax rates
on petroleum products begin?

a. January 1, 2018 c. January 1, 2020

b. January 1, 2019 d. January 1, 2021
Theoretical Outcome
vs. Actual Outcome
Theoretical Outcome
The overarching objective of RA 10963 is laudable. It seeks to improve the
fairness, efficiency, and simplicity of the tax system while at the same
time protecting the national government’s aggregate revenue take.

Describing the approval of the TRAIN as “an important milestone in our

history, Finance Secretary Carlos Dominguez III noted that this was the
first time that a tax reform bill was passed by the Congress that was not in
response to a crisis or to any external pressure.

"The TRAIN, which provides for personal income tax (PIT) exemptions for
the first P250,000 of taxable income, along with other significant PIT cuts
for other tax brackets, provides Filipino taxpayers with “much-needed
relief” after 20 years of no adjustment on the rates," he said.

Dominguez said preliminary computations show that the government

would be giving “almost P150 billion” back to the people in the form of tax
relief under the TRAIN. Hence, he said...
 “
Biggest
christmas and
new year’s gift
to the Filipino people”

-Finance Secretary Carlos Dominguez III, 2017

Actual Outcome
ON WELFARE AND POVERTY
Aside from the public backlash that TRAIN
met – when inflation shot up to record highs
– two studies by researchers at the Philippine
Institute for Development Studies (PIDS) show
that TRAIN actually worsened the plight of
millions of Filipinos.

Specifically, using numerical simulations,

the studies demonstrate that TRAIN likely
worsened poverty, income inequality, and
revenue losses in the country.
 “ The Department of
Social Welfare and Development
(DSWD) is mandated to provide
Unconditional Cash Transfers
to the poorest 10 million households.

Each household would get P2,400 per

year in 2018, as well as P3,600 per year
in 2019 and 2020.”

-Finance Secretary Carlos Dominguez III

Welfare impacts of TRAIN by income group
1st (poorest)
2nd

3rd
4th

5th

6th

7th

8th

9th

10th (richest)
-2 0 2 4 6 8

Change in EV (TRAIN without transfers) Change in EV (TRAIN with transfers)

Chart: Punongbayan, J., 2019 (Graphics edited by the Authors), Source: Tuano et al., 2018

The chart shows shows that the government will have to give a lot of money to make the poor at least as well-off
as they were before TRAIN. It also shows that the poor and middle class hurt the most from TRAIN, not the rich.

EV stands for "equivalent variation," a measure of welfare in economics.

TRAIN's impact on poverty by sector

BASELINE

Fisherfolk
Individuals

Women

Households
Farmers
Transport

Worker -8 -6 -4 -2 0 2 4

Change in poverty incidence (TRAIN with transfers) Change in poverty incidence (TRAIN without transfers)

Chart: Punongbayan, J., 2019 (Graphics edited by the Authors), Source: Tuano et al., 2018

Changes in welfare are measured by the change in poverty incidence which is affected by the change in incomes
and the change in commodity prices. Given that there are the increases in prices across many commodities is
higher than the increase in factor returns, there is a slight decline in real income and therefore an increase in
poverty incidence.
However, the provision of the cash transfers offsets the increase in poverty incidence across sectors, especially
for transport workers; most transportation workers are near poverty so that the income support program results
in a significant improvement in their welfare. But at the same time, there is a slightly higher poverty incidence
for the other sectors.
“
It is like the government is just
giving us a new perspective to
look at our taxes. You have higher
pay, but electricity, transport,
grocery bills will also be higher”
-Royd Agapito,
Market Analyst,
(earning Php 30,000 monthly)
Source: Rappler
“ Dati P5 per stick lang 'yung Marlboro.
Ngayon binebenta ko na ng P7 isa. Dahil mas
mahal na 'yung pakete, binawasan ko na
lang 'yung pagbili ko ng supplies. Ang taas
nang itinaas. Paano naman kaming walang
suweldo at pagbebenta ang kabuhayan?”
-Meanne Reyes, 48-year-old Vendor
Source: Rappler
Actual Outcome
ON REVENUE LOSSES
MEANWHILE, in another study titled “Assessment of Republic
Act 10963: The 2017 Tax Reform for Acceleration and
Inclusion,” PIDS Senior Research Fellow Rosario G. Manasan
said TRAIN 1 would lead to higher revenue losses for the
government.

She estimated that losses of around:

P210 billion are due for 2018;
P223 billion for 2019 to 2022; and
P238 billion in 2023.
These are all higher than government estimates and are
based on data from the Family Income and Expenditure
Survey (FIES).
Actual Outcome
Furthermore, while TRAIN 1 seems to tax the rich more given the higher income rates for higher income earners,
in truth the main impact is on the “very, very rich” or those earning P12 million or more per year.

She said the average effective tax rate (ETR) on compensation income will decline from

5.4% 1.1% 0.9%

(Old tax regime) (2018-2022) (2023 onward)

However, for the self-employed and/or professionals (SEPs), the decline in average ETR declines at a slower pace
from
1.7% 0.8% 0.7%
(Old tax regime) (2018-2022) (2023 onward)

“The gap between the average ETR between compensation earners and SEPs is expected to narrow but the
average ETR of SEPs is projected to continue to be lower than that from 2022 onward” Manasan said.
Actual Outcome
Overall, this study estimates the reforms under RA 10963 to result in a reduction in total tax revenues
of the national government of
2018 2019

Php 66B Php 33B

(0.4% OF GDP) (0.2% OF GDP)

However, RA 10963 is projected to generate additional revenues of

2020 onwards

Php 6B
(0.03% OF GDP)

These estimates of the incremental revenues are very much lower than the official estimates which
place the revenue gains from the TRAIN law at
2018 2019

Php 63B Php 104B

Conclusion
The first year of the implementation of TRAIN Law has been controversial
when it failed it live up to its promise to reduce the tax bite on the
poorest/ poorer households despite the aforementioned social welfare and
benefits program.

First, while the impact of the TRAIN on prices as a result of higher

indirect taxes was felt almost immediately at the start of 2018, the
implementation of the unconditional cash transfer program for the 4Ps
beneficiaries was only started in March 2018 while that of the fuel voucher
program started much later.

Second, fare discounts for minimum wage earners, the unemployed and
the poorest 50% of the population has not been implemented to date
because of the absence of implementing mechanisms.

Third, the increase in the price of basic goods as a result of RA 10963 was
confounded by three extraneous events – the depreciation of the peso, the
rise in the world price of oil and the shortage of NFA rice in the market.
Which sector experienced the largest
improvement in welfare after the
provision of cash transfers?

a. Fisherfolk c. Farmers
b. Transport Sector d. Individuals
By how many percent
did it improve?
a. From 2.07% to -8.15%
b. From 2.00% to -9.00%
c. From 2.06% to -8.16%
d. From 3.00% to -8.00%
References
Castillo, C. J., Clarete, R., Muyrong, M., Tuano, P., & Banaag, M. (2018). Assessment of TRAIN’s Coal and Petroleum Excise Taxes: Environmental Benefits and Impacts on
Sectoral Employment and Household Welfare. Discussion Paper, 48-60.

de Vera, B. O. (2017, December 22). Duterte vetoes 5 Train provisions. Retrieved from https://business.inquirer.net/242937/duterte-vetoes-5-train-provisions

Finance, D. of. (n.d.). Package 1: TRAIN. Retrieved from https://taxreform.dof.gov.ph/.

Manasan, R. (2018). Assessment of Republic Act 10963: The 2017 Tax Reform for Acceleration and Inclusion. Discussion Paper, 22-30.

Divina Law (2018). A Consolidated And Comparative Analysis Of Republic Act 10963 (Tax Reform For Acceleration And Inclusion Law)

Punongbayan, J. (2019, April 25). ANALYSIS:How the TRAIN law worsened poverty, inequality. Retrieved from
https://www.rappler.com/thought-leaders/228952-how-tax-reform-law-worsened-poverty-inequality-philippines

Philippine Information Agency. (2017, December 19). TRAIN is Duterte admin’s 'best Christmas and New Year’s gift' to Filipino people - DOF. Retrieved from
https://pia.gov.ph/news/articles/1003280

National Tax Research Center. (2018, March). Tax Changes You Need to Know. Retrieved October 7, 2019, from
http://www.ntrc.gov.ph/images/Publications/train/tax-changes-you-need-to-know.pdf.

Dela Paz, C. (2018, January 09). EXPLAINER: How the tax reform law affects Filipino consumers. Retrieved from
https://www.rappler.com/newsbreak/iq/193170-train-tax-reform-law-effects-filipino-consumers-workers

Ordinario, C. (2019, April 25). Study: TRAIN law hurt lower-income folk more. Retrieved from
https://businessmirror.com.ph/2019/04/25/study-train-law-hurt-lower-income-folk-more/

Gimena, A. (2019, January 14). Revisiting the TRAIN Law. Retrieved from https://www.bworldonline.com/revisiting-the-train-law/
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