After passing the House of Congress last May, The Tax Reform for Acceleration and Inclusion (also known as TRAIN) has finally reached the approval of the Senate committee.
The Story So Far…
September 20, 2017 — Wednesday — The committee report was signed by 17 senators, in support of the proposed tax bill.
According to Sen. Juan Edgardo Angara, panel chairman of the senate ways and means committee, the exemptions implemented on this revised bill would bring tax relief to an approximately 99% of 7.5 million BIR-registered taxpayers in the Philippines, as they would benefit from the reduced personal income tax rates. The government is also expected to achieve ₱134 billion revenue with this approved senate version of TRAIN.
Major changes were added to this new version of the comprehensive tax reform package under Senate Bill No. 1592. Here are some of the comparisons between the house approved and the senate version of the tax bill.
Annual Personal Income Tax Exemption
In this senate version of the tax bill, taxpayers with annual earnings of ₱150,000 pays zero taxes, while those with earnings up to ₱250,000 will annually be exempted from income tax only if they have four dependents.
This is quite different from the House Bill, in which those who earns ₱250,000 a year, would pay zero taxes, even if they don’t have children.
The ₱82,000 tax exemption for 13th month pay, as well as other types of bonuses had been retained by the senate bill.
Excise Tax on Fuel
Changes were also made when it comes to excise taxes imposed on petroleum, as the ₱6.00 excise tax will be divided, and rates for the next three years will be adjusted into: ₱1.75/liter (year one), ₱2.00/liter (year two) and ₱2.25/liter (year three).
As for liquid petroleum gas (LPG), the new tax bill lowers it down to ₱1.00/liter during the next three (3) years, while kerosene was deemed exempted from excise tax, since the Department of Finance stated that up to 3 million families benefit from using kerosene in their daily household activities.
These rules on excise taxes will be lifted if the following scenarios takes place:
1. Inflation exceeds govt target, and
2. World crude prices exceed $80/barrel
Tax Imposed on Sweetened Beverages
Yet another controversial issue since the passing of this tax bill is the excise taxes on sweetened beverages.
The Senate version provisions:
- ₱5/liter – Caloric Sweeteners
- ₱3/liter – Non-caloric sweeteners
- ₱10/liter High Fructose Corn Syrup
Coffee, Milk as well as 3-in-1 coffee are also exempted from excise tax, as studies reveal that up to 80% of Filipinos regularly consume these.
Auto Excise Tax
For the meantime, the Senate also implemented the same provisions when it comes to excise tax on automobiles. The 5-tier bracket goes as follows:
Property Estate Taxes
Same rates still goes for estate taxes, as the Senate adopted the 6% flat tax rate.
The Senate tax bill also stated that net estates worth ₱5 million and below will be exempted from taxes, as well as agricultural lands of up to 3 hectares.
VAT exemptions will be maintained for the following taxpayers/business Industries:
- Business Process Outsourcing (BPO) Companies
- Food Production
- PWDs (Persons with Disabilities)
- Raw food
- Senior Citizens
- Socialized Housing
- Small businesses with owner’s sales of goods/services of ₱3 million and below.
In a statement by Finance Secretary Carlos Dominguez III, he said:
“We hope the Senate will pass the TRAIN on third reading before going into recess in mid-October, the bicameral conference to conclude in November, and the President to sign the bill into law by December 15, 2017.”