Comparative analysis of Philippines 1997 tax code & amendments & repeals introduced by tax reform for acceleration & inclusion law

15 Jan 2018

 

A.     ADMINISTRATIVE

OLD TAX CODE

AMENDMENTS INTRODUCED BY TRAIN LAW

§  No TIMTA yet at the time of the enactment of 1997 Tax Code

 

 

 

§  Presence of counterpart restrictions

 

 

 

 

§  No period is provided

§  Power of the Commissioner to obtain information to include data supplied by Cooperative Development Authority in compliance with “The Tax Incentives Management & Transparency Act (TIMTA)”

 

§  Power of the Commissioner to make assessments notwithstanding any law requiring prior authorization of any government agency or instrumentality

 

§  Authority of the Commissioner to prescribe real property values subject to automatic adjustment once every three (3) years

 

B.      INDIVIDUAL INCOME & RETURNS & PAYMENT

§  Below Php 10,000.00 taxed at 5%

§  Over Php 500,000.00 taxed at 32%

§  No counter-part provision

§  Below Php 250,000.00 no tax

§  Over Php 8M taxed at 35%

§  Optional for self-employed & professionals to be taxed at 8% for gross revenues below Php 3M or the new VAT threshold

§  Personal exemption-Php 50,000.00

§  Additional exemption-Php 25,000.00 per child

§  No more personal and additional exemptions

§  No counter-part provision

§  Minimum wage earners receiving holiday pay still exempt from income tax

§  Tax exempt 13th Month Pay & Other Benefits including Productivity Incentives & Christmas Bonus-Php 82,000.00

§  Php 90,000.00

§  Employees of RHQ, ROHQ, OBU, & Petroleum Service Contractors taxed at 15%

§  Preferential tax treatment of 15% shall not apply anymore to registrants after January 1, 2018

§  Fringe Benefit Tax-32%

§  35%

§  None

§  Returns to consist of maximum of 4 pages showing personal profile & information, gross revenues, allowable deductions, taxable income, income tax due & payable

§  Deadline for 1st Quarter & Annual ITR-April 15

§  Deadline for 2nd Installment of Annual Income Tax Due-July 15

§  May 15

 

§  October 15

C.      PASSIVE INCOME

§  PCSO & Lotto Winnings-exempt

§  Taxable above Php 10,000.00

§  Interest income on foreign currency denominated units-7.5%

§  15% whether recipient is individual or domestic corporation

§  Capital gains tax on unlisted shares-5% for 1st Php 100,000.00 net capital gains realized and 10% in excess of Php 100,000.00

§  15%

D.     ESTATE

§  Progressive at 5% to 20%

§  Flat rate of 6%

§  Standard deduction at Php 1M

§  Php 5M

§  Family home Php 1M

§  Php 10M

§  CPA Certification needed at Php 2M

§  Php 5M

§  None

§  Final withholding tax at 6% on withdrawals on deposits of decedent

§  Estate tax return filing deadline-within 6 months from the date of death

§  1 year

§  No counterpart provisions

§  Payment by installment in 2 years in case of insufficient cash without civil penalty & interest

E.      DONATION

§  0%-15% & 30% on donations to strangers

§  6% in excess of Php 250,000.00

F.       VAT

§  VAT threshold-Php 1,919,500.00

§  Php 3M

§  Sale of goods to PEZA-0%

 

§  VAT exempt sale of residential lot-not more than Php 1,919,200.00

§  VAT exempt sale of residential house & lot-Php 3,199,200.00

§  VAT exempt lease of residential unit-Php 10,000.00

§  Association dues, membership fees & other assessments & charges of homeowner’s association & condominium corporation-vatable

§  Transfer property pursuant to Section 40 (C) (2) of the Tax Code on tax-free exchange-vatable

§  Sale of medicines-12% VAT

 

§  Subject to 12% upon implementation of enhanced VAT refund system

§  Php 1.5M

 

§  Php 2.5M, by 2021 Php 2M

 

§  Php 15,000.00

 

§  VAT exempt

 

 

§  VAT exempt

 

 

§  VAT exempt Transfer of Sale of drugs and medicines for diabetes, high cholesterol & hypertension-VAT exempt effective January 1, 2019

 

 

§  Amortization of input VAT on capital goods

§  Repealed by 2022

§  120-day period within which to refund reckoned from the complete submission of documents

§  In case of inaction, appeal to CTA after the expiration of 120-day period

§  90 days reckoned from the date of submission of official receipts & invoices

 

 

§  BIR officer may be punished

§  Monthly & quarterly VAT filing

§  Effective 2023 only quarterly VAT filing

G.     PERCENTAGE TAX

§  Cooperatives are exempt from 3% gross receipts tax

§  Beginning January 1, 2019 , annual gross receipts not exceeding Php 500,000.0 shall be exempt from 3%

§  Self-employed & professionals with gross receipts of Php 1,919,500.00 and less-subject to 3%

§  Exempt effective January 1, 2019 if annual gross receipts not exceeding Php 500,000.00

§  Stock transaction tax on listed shares-0.50 of 1%

§  0.60 of 1%

H.     EXCISE TAX

§  Php 31.20 per pack with 4% increase annually

§  Php 32.50-January 2018

Php 35.00-January 2019

Php 37.50-January 2020

Php 40.00-January 2022

4% annual increase

§  Diesel-Php 0.00 per liter

 

 

§  Unleaded & premium gasoline-Php 4.35 per liter

§  Php 2.50 per liter-2018

Php 4.50 per liter-2019

Php 6.00 per liter-2020

 

§  Php 7.00 per liter-2018

Php 9.00 per liter-2019

Php 10.00 per liter-2020

§  No counterpart provisions

§  Mandatory marking of all fuel products

§  2% for up to Php 600,000.00

§  Php 12,000.00 + 20% in excess of Php 600,00.00

§  Php 112,000.00 + 40% in excess over Php 1.1M

§  Php 512,000.00 + 60% of excess over Php 2.1M

§  4%

§  10% for over Php 600,000.00-Php 1M

 

 

 

§  20% for over Php 1M-Php 4M

 

§  50% for over Php 4M

§  Cosmetic procedures for aesthetic reasons-none

§  5%

§  Sweetened beverages-none

§  Php 6.00 per liter using caloric & non-caloric sweeteners

§  Php 12.00 per liter using high-fructose corn syrup

§  Php 10.00.00 per metric ton of coal

 

 

§  Various rates for other minerals

§  Php 50.00-2018

Php 100.00-2019

Php 150.00-2020

 

100% increase in rate for other minerals

I.        DOCUMENTARY STAMP TAX

§  Various transactions subject to different rates & amounts

§  100% increase in rate except DST on loans from Php 1.00 to Php 1.50 per Php 200.00 & no increase in sale of real property & insurance policies

 

J.        COMPLIANCE REQUIREMENTS

§  Php 600,000.00 threshold for keeping of books of accounts for entities

§  Php 3M

K.      ADMINISTRATIVE PROVISIONS

§  Php 25.00 sale required to issue official receipt/invoice

§  Php 100.00.0

§  Electronic sales reporting-none except the current Quarterly Summary List of Sales & Purchases & List of Importation, e-Sales Reporting

§  Enhanced electronic point of sales reporting by taxpayers engaged in export of goods & services & Large Taxpayers within 5 years from enactment of TRAIN

§  Monthly filing of withholding tax & percentage tax/VAT

§  Quarterly filing of withholding tax except compensation & VAT/percentage

§  Deficiency interest-20%

§  Double the legal interest rate per annum

§  Penalty for failure to transmit sales data entered on Cash Register Machine/Point of Sales Machine to the BIR’s Electronic Sales Reporting System-administrative penalty

§  1/10 of 1% of the annual net income for the 2nd year preceding the current taxable year for each day of violation or Php 10,000 whichever is higher & permanent closure if violation exceeds 180 days

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For more information

Willie Santiago Willie Santiago

Director - Tax and Corporate Services
Diaz Murillo Dalupan and Company
Philippines

Phone: +63 (0)894 5892

willie.santiago@dmdcpa.com.ph

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