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Republic Act No.

10963

Tax Reform for Acceleration and Inclusion (Train) Law

Comparison between the NIRC and Train:

i. Income Tax

NIRC R.A 10963


Not Over P10,000 5% (Effective 1 January 2018)
Over P10, 000 but P500 + 10% of the Not over 0%
not over P30, 000 excess over P10, 000 PHP250,000
Over 30,000 but not 2,500 + 15% of the Over 250,000 but 20% of the excess
over 70,000 2,500 + excess over 30,000 not over 400,000 over PHP250,000
15% of the excess Over 400,000 but 30,000 + 25% of the
over 30,000 not over 800,000 excess over 400,000
Over 70,000 but not 8,500 + 20% of the Over 800,000 but 130,000 + 30% of the
over 140,000 excess over 70,000 not over 2,000,000 1 excess over 800,000
Over 140,000 but 22,500 + 25% of the Over 2,000,000 but 490,000 + 32% of the
not over 250,000 excess over 140,000 not over 8,000,000 excess over
Over 250,000 but 50,000 + 30% of the 2,000,000
not over 500,000 excess over 250,000 Over 8,000,000 2,410,000 + 35% of
Over 500,000 125,000 + 32% of the excess over
the excess over 8,000,000
500,000

R.A 10963
(Effective 1 January 2023)
Not over 0%
PHP250,000
Over 250,000 but 15% of the excess
not over 400,000 over PHP250,000
Over 400,000 but 22,500 + 20% of the
not over 800,000 excess over 400,000
Over 800,000 but 102,500 + 25% of the
not over 2,000,000 excess over 800,000
Over 2,000,000 but 402,500 + 30% of the
not over 8,000,000 excess over
2,000,000
Over 8,000,000 2,202,500 + 35% of
the excess over
8,000,000
Tax Particulars NIRC R. A. No. 10963

Individual income tax rates B. Purely self-employed and


professionals If gross
sales/receipts and other non-
operating income do not exceed
the PHP3m VAT threshold,
taxpayer may opt to be taxed
at: • 8% of gross sales/receipts
and other non-operating
income in excess of PHP250,000
in lieu of graduated rates and
percentage tax; or • Graduated
rates in (A) above.
C. Mixed income earners shall
be taxed as follows: On their
compensation income – at
graduated rates On their
income from the conduct of
trade or business or the practice
of profession: • If exceeding the
VAT threshold (P3, 000, 000) –
at graduated rates • If below
the VAT threshold – either 8% of
gross sales/ receipts and other
non-operating income in excess
of PHP250,000 in lieu of
graduated rates and percentage
tax or graduated rates, at the
option of the taxpayer
Passive income from interest, Sec. 24 (B) (1) Philippine Charity PCSO and lotto winnings
royalties, prizes and other Sweepstakes Office (“PCSO”) exceeding PHP10,000 would be
winnings of individual citizen and lotto winnings are exempt subject to the 20% final tax.
and resident alien from the 20% final tax. Interest Interest income from a
income from a depository bank depository bank under the
under the expanded foreign expanded foreign currency
currency deposit system is deposit system is subject to an
subject to a final tax of 7.5%. increased final tax of 15%
Capital gains from sale of shares Sec. 24 (C) Capital gains tax of Capital gains tax on sale of
of stock not traded in the local 5% on the first PHP100,000 and shares not traded in the local
stock exchange of individual 10% in excess thereof is stock exchange is increased to a
citizen and resident alien imposed on sale of shares not flat rate of 15%.
traded in the local stock
exchange.
Alien individuals and qualified Sec. 25 (C), (D) and (E) A rate of Preferential tax treatment shall
Filipinos employed by specific 15% final withholding tax on the not apply for employees of
employers gross compensation income of ROHQ, RHQ, OBU, and
alien individuals and qualified Petroleum service contractors
Filipinos employed by the and subcontractors which
following employers: • Regional registered with the Securities
or area headquarters (“RHQ”) and Exchange Commission
and regional operating beginning 1 January 2018.
headquarters (“ROHQ”) of [ITEM VETOED] Present and
multinational companies; • future qualified employees of
Offshore banking units (“OBU”); existing ROHQ, RHQ, OBU, and
and • Petroleum service Petroleum service contractors
contractors and subcontractors. and subcontractors as of 31
December 2017 shall enjoy
preferential tax treatment
Tax Particulars NIRC R. A. No. 10963

Government- owned or Sec. 27 (C) The Government Corporate income tax


controlled corporations, Service Insurance System, exemption of PCSO was
agencies or instrumentalities the Social Security System, removed
the Philippine Health
Insurance Corporation, the
local water districts and the
PCSO are exempt from
corporate income tax.
On exemption of 13th month Sec. 32 (B) (7) (e) 13th month Amount of exempt 13th
pay and other benefits pay and other benefits month pay and other
exemption amounting to PHP82,000 is benefits is increased to PHP
excluded from the 90,000. The provision of
computation of gross power of the President to
income. The President shall make adjustments on the
adjust the amount of income said amount is removed.
tax exemption to its present
value using the Consumer
Price Index (“CPI”) for other
benefits such as productivity
incentives and Christmas
bonus every three years.
Fringe benefit tax given to Sec. 33 (A) Fringe benefits Effective 1 January 2018,
non-rank and file employees given to non-rank and file fringe benefits given to non-
employees are subject to rank and file employees are
32% final tax rate. The subject to 35% final tax rate.
grossed-up monetary value is The grossed-up monetary
determined by dividing the value is determined by
actual monetary value by dividing the actual monetary
68%. value by 65%.
Optional standard deduction Sec. 34 (L) In lieu of the In case of a general
(“OSD”) itemized allowable professional partnership, the
deductions, an individual OSD may be availed only
subject to tax, other than a once by either the general
nonresident alien, may elect professional partnership or
an OSD of 40% of gross sales the partners comprising such
or gross receipts. partnership.
Deduction of premium Sec. 34 (M) Allowed Repealed
payments on health and/or deduction of PHP2,400 per
hospitalization insurance year or PHP200 per month
worth of premium payments
on health and/or
hospitalization insurance of
an individual provided that
the family has a gross income
not exceeding PHP250,000
for the taxable year.
On personal and additional Secs. 35 and 79 (D) Repealed
exemptions Exemptions on the following:
• PHP50,000 worth of basic
personal exemption •
PHP25,000 worth of
additional exemption per
qualified dependent not
exceeding four. • Personal
exemption allowable to
nonresident alien individual
Exemption allowed to estate Sec. 62 Exemption of Repealed
and trust PHP20,000 allowed from the
income of the estate or trust.
Income tax collected at Sec. 79 (F) Husband deemed Repealed
source – husband and wife head of the family and
proper claimant of the
additional exemption. Taxes
to be withheld from the
wages of the wife must be in
accordance with the table for
zero exemption of the
withholding tax table.