comparison of ra no. 10963 and ra no. 8424, as amended · ra no. 10963 and ra no. 8424, as amended...

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Comparison of

RA No. 10963

and RA No. 8424,

as amended

Rotary Club of Manila

January 25, 2018

Background of the Tax Reform

• The Tax Reform for Acceleration and Inclusion amends certain provisions of

Republic Act No. 8424 (The National Internal Revenue Code of 1997), as

amended.

• The enrolled bill was sent to President Duterte for approval and was signed into

law as Republic Act No. 10963 on December 19, 2017. The law takes effect

this January 1, 2018 following its complete publication in the Official Gazette last

December 27, 2017.

• The President has issued a separate letter vetoing 5 provisions of the signed

TRAIN Law.

• The law is just the first tax reform package. The second package (reduction of

corporate income tax and rationalization of fiscal incentives) is estimated to be

released by early 2018.

CONFIDENTIAL SL - 2

Key amendments

The amendments focus on:

• Individual Income Tax

• Final Income Tax

• Estate Tax

• Donor’s Tax

• Value Added Tax

• Excise Tax on:

– Automobiles

– Petroleum products

– Sweetened beverages

– Mineral products

– Cosmetic surgeries (non-essential services)

• Documentary Stamp Tax

• Some administrative provisions

• Penalties

CONFIDENTIAL SL - 3

Power and authority of the

Commissioner

TRAIN NIRC Provision

Provides for the authority of the

Commissioner to obtain

information from national and

local governments, government

agencies and instrumentalities

Power and authority of the Commissioner

Additional provision:

The Cooperative Development

Authority shall submit a report

on tax incentives availed by

cooperatives to the BIR and

DOF.

These information shall be

included in the Tax Incentives

Management and

Transparency Act (TIMTA)

database.

CONFIDENTIAL SL - 5

NIRC

Section 5 (B)

Power of the

Commissioner to

obtain information, and

to summon, examine

and take testimony of

persons


The Commissioner has the

authority to determine fair

market value of real properties.

Power and authority of the Commissioner

In exercising this authority, the following shall be observed:

1. Mandatory consultation with both private and public competent appraisers before division of the Philippines into zones.

2. Prior notice to affected taxpayers before the determination of fair market values of the real properties.

3. Publication or posting of adjustments in zonal value in a newspaper of general circulation in the province, city or municipality concerned.

4. The basis of valuation and records of consultation shall be public records open to the inquiry of any taxpayer.

5. Zonal valuations shall be automatically adjusted once every three years.

CONFIDENTIAL SL - 6

NIRC

Section 6

Power of the

Commissioner to make

assessments and

prescribe additional

requirements for tax

administration and

enforcement

Personal and/or Corporate

Income Tax


Taxable income of individuals

are subject to the following

graduated rates:

Personal Income Tax

The amendment provides for

revised personal income tax

brackets for 2018-2022:

CONFIDENTIAL SL - 8

NIRC

Section 24

Income tax rates on

Individual Citizen and

Individual Resident

Alien of the Philippines

TAX SCHEDULE

Not over ₱10,000

5%

Over ₱10,000 but not over

₱30,000

₱500 + 10% of the excess over

₱10,000 Over ₱30,000 but not over

₱70,000

₱2,500 + 15% of the excess over

₱30,000 Over ₱70,000 but not over ₱140,000


₱70,000 Over ₱140,000

but not over ₱250,000


₱140,000

TAX SCHEDULE EFFECTIVE

JANUARY 1, 2018 TO

DECEMBER 31, 2022

Not over

₱250,000

0%


Taxable income of individuals

are subject to the following

graduated rates:

Personal Income Tax

The amendment provides for

revised personal income tax

brackets for 2018-2022:

CONFIDENTIAL SL - 9

NIRC

Section 24

Income tax rates on


Individual Resident


TAX SCHEDULE

Over ₱250,000

but not over

₱500,000

₱50,000 + 30% of

the excess over

₱250,000

Over ₱500,000 ₱125,000 + 32% of

the excess over

₱500,000


JANUARY 1, 2018 TO

DECEMBER 31, 2022

Over ₱250,000

but not over

₱400,000

20% of the excess

over ₱250,000

Over ₱400,000

but not over

₱800,000

₱30,000 + 25% of

the excess over

₱400,000

Over ₱800,000

but not over

₱2M

₱130,000 + 30% of

the excess over

₱800,000

Over ₱2M but

not over ₱8M

₱490,000 + 32% of

the excess over ₱2M

Over ₱8M ₱2,410,000 + 35% of



Personal Income Tax

For 2023 onwards:

CONFIDENTIAL SL - 10

NIRC

Section 24

Income tax rates on


Individual Resident



JANUARY 1, 2023 onwards

Not over

₱250,000

0%

Over ₱250,000

but not over

₱400,000

15% of the excess

over ₱250,000

Over ₱400,000

but not over

₱800,000

₱22,500 +

20% of the excess

over ₱400,000

Over ₱800,000

but not over

₱2,000,000

₱102,500 + 25% of

the excess over

₱800,000

Over ₱2M but

not over ₱8M

₱402,500 + 30% of


Over ₱8M ₱2,202,500 + 35% of



Personal Income Tax

Note that the BIR issued

through Revenue

Memorandum Circular No. 1-

2018 the revised withholding

tax on compensation table.


NIRC

Section 24

Income tax rates on


Individual Resident



Taxable income is subject to

the same graduated rates.

Personal Income Tax

For Purely Self-employed

and/or Professionals whose

gross sales/receipts and other

non-operating income do not

exceed the VAT threshold of

₱3M, the tax shall be, at the

taxpayer’s option, either:

1. 8% income tax on gross

sales or gross receipts in

excess of ₱250,000 in lieu

of the graduated income tax

rates and the percentage

tax; OR

2. Income tax based on the

graduated income tax rates

for individuals.


NIRC

Section 24

Income tax of self-

employed and/or

professionals




Personal Income Tax

For mixed income earners

(earning both compensation

income and income from

business or practice of

profession, their income taxes

shall be:

1. For income from

compensation –

Graduated income tax rates

for individuals, AND


NIRC

Section 24

Income tax of mixed

income earners




Personal Income Tax

2. For income from business or practice of profession:

a. Gross sales/receipts which do not exceed the VAT threshold of ₱3M — 8% income tax on gross sales/receipts and other non-operating income income OR graduated income tax rates on taxable income, at the taxpayer’s option

b. Gross sales/receipts and other non-operating income which exceeds the VAT threshold of ₱3M — graduated income tax rates for individuals.


NIRC

Section 24

Income tax of mixed

income earners


Philippine Charity Sweepstakes

and Lotto winnings is exempt

from the 20% final tax.

Personal Income Tax

Philippine Charity Sweepstakes

and Lotto winnings in excess of

₱10,000 shall be subject to the

20% final tax.


NIRC

Section 24 (B)(1)

Final tax on winnings


Interest income received by an

individual taxpayer (except a

non-resident individual) from a

depository bank under the

expanded foreign currency

deposit (EFCD) system is

subject to 7.5% final tax.

Personal Income Tax

The rate of final tax on interest

income received by resident

individual taxpayer under the


deposit system increased from

7.5% to 15% final tax.


NIRC

Section 24 (B)(1)

Final tax on interest on

foreign currency

deposit


The capital gains tax on net

capital gains realized from sale,

barter, or exchange or other

disposition of shares of stock in

a domestic corporation not

traded through the stock

exchange is:

Not over ₱100,000 – 5%

On any amount in excess of

₱100,000 – 10%

Personal Income Tax

The final tax rate for net capital

gains tax on the sale, barter,

exchange or other disposition

of shares of stock in a domestic

corporation not traded through

the stock exchange is

increased from the 5/10% CGT

to a flat rate of 15% CGT.


NIRC

Section 24 (C)

Capital gains tax on

sale of shares not

traded through the

stock exchange


Alien individuals and qualified

Filipino employees employed by

1. Regional or area and

Regional Operating

headquarters of multinational

companies (RHQs and

ROHQs) [Subsection (C)]

2. Offshore banking units

(OBUs) [Subsection (D)]

3. Petroleum Service contractor

and subcontractor

[Subsection (E)]

are subject to a preferential tax

of 15% final withholding tax on

gross compensation income.

Personal Income Tax

Additional provision

[Subsection (F)]:

The 15% preferential tax rate

provided in Subsections (C), (D),

and (E) shall not be applicable to

RHQs, ROHQs, OBUs or

Petroleum service contractor and

subcontractor registering with the

SEC after January 1, 2018.

But existing RHQs, ROHQs,

OBUs or Petroleum service

contractor and subcontractor

shall continuously be entitled to

avail of the preferential tax

treatment for their present and

future qualified employees.


NIRC

Section 25 (C), (D), (E)

Preferential tax rate for

individuals employed

by RHQ, ROHQ, OBU

and Petroleum

Contractors and

subcontractors


Personal Income Tax

Presidential Veto:

The President vetoed this line item under Subsection (F):

“But existing RHQs, ROHQs, OBUs or Petroleum service contractor and subcontractor shall continuously be entitled to avail of the preferential tax treatment for their present and future qualified employees.”

for being violative of equal protection.

The President stated in his letter that “[g]iven the significant reduction in the personal income tax, the employees of these firms should follow the regular tax rates applicable to other individual taxpayers.”


NIRC

Section 25 (C), (D), (E)

Preferential tax rate for

individuals employed

by RHQ, ROHQ, OBU

and Petroleum

Contractors and

subcontractors


Means the pertinent items of

gross income specified in this

Code, less the deductions

and/or personal and additional

exemptions, if any, authorized

for such types of income by this

Code or other special laws

Personal Income Tax

The phrase “and/or personal

and additional exemptions” is

removed in the definition.


NIRC

Section 31

Definition of Taxable

Income


Individual taxpayers are

entitled to:

Basic Personal Exemption —

₱50,000

and

Additional Exemption —

₱25,000 per qualified

dependent child.

Personal Income Tax

The Basic Personal and

Additional Exemptions of

individual taxpayers are

removed.

The related provision on

furnishing of exemption

certificate is likewise removed.


NIRC

Section 35

Personal Exemptions


The amount of tax-exempt 13th

month pay and other benefits is

₱82,000.

Personal Income Tax

The amount of tax-exempt 13th

month pay and other benefits is

increased to ₱90,000.


NIRC

Section 32 (B)

Tax exempt 13th month

pay


• Fringe benefits given to non-

rank and file employees are

subject to 32% final tax.

• The grossed up monetary

value of the fringe benefit

given to non-rank and file

employees shall be

determined by dividing the

actual monetary value by

68%.

Personal Income Tax

• The Fringe Benefits Tax is

increased to 35% effective

January 1, 2018.

• The grossed up monetary

value of the fringe benefit

given to non-rank and file

employees shall be

determined by dividing the

actual monetary value by

65%.


NIRC

Section 33 (A)

Tax on fringe benefits

given to non-rank and

file employees


The allowable deduction for

premium payments on health

and/or hospitalization

insurance of an individual

taxpayer is ₱2400 per year or

₱200 per month, subject to a

gross family income threshold

of ₱250,000.

Personal Income Tax

Allowable deduction for

premium payments on health

and/or hospitalization

insurance of an individual

taxpayer is removed.


NIRC

Section 34 (M)

Allowable deduction for

premium payments on

health and/or

hospitalization

insurance


An individual whose gross

income does not exceed his

total personal and additional

exemptions for dependents are

not required to file income tax

return (ITR).

Personal Income Tax

Individual taxpayers whose

taxable income is subject to

zero percent under the new

graduated tax table (i.e., does

not exceed ₱250,000) shall not

be required to file an income

tax return.


NIRC

Section 51

Filing of individual

income tax return


Personal Income Tax


The ITR shall consist of a

maximum of four (4) pages in

paper OR electronic form. It shall

only contain the following

information:

• Personal profile and

information

• Gross sales receipts or income

from compensation, from

business, or from exercise of

profession (except income

subject to final tax)

• Allowable deductions

• Taxable income

• Income tax due and payable


NIRC


No provision.

Personal Income Tax

Substituted filing of ITRs is available for:

• Individual taxpayers

• Receiving purely compensation income, regardless of amount

• From only one employer in the Philippines for the calendar year

• The income tax of which has been correctly withheld by the employer (i.e. tax due = tax withheld)

The Certificate of Withholding filed by the employers duly stamped “received” by the BIR shall be the substituted filing by such employers.


NIRC

Section 51-A

Substituted Filing of

Income tax returns by

employees receiving

purely compensation

income from only one

employer in the

Philippines


When tax due exceeds ₱2,000,

the taxpayer (other than a

corporation) may elect to pay

the tax in two equal

installments. Payment of

installments:

• First installment — time of

filing of return

• Second installment — on or

before July 15 following the

close of the calendar year.

Personal Income Tax

The new deadline of payment

of second installment is

October 15 following the close

of the calendar year.


NIRC

Section 56 (A)(2)

Installment Payment of

tax due for individuals

and corporations


There is an allowed personal

exemption of ₱50,000 from the

income of the estate or trust.

Personal Income Tax

The exemption for estates and

trusts is removed.


NIRC

Section 62

Exemption for estates

and trusts


Every individual subject to income tax shall make and file a declaration of his estimated income for the current taxable year on or before April 15 of the same taxable year.

The amount of estimated income with respect to which a declaration is required shall be paid in four (4) installments:

• First – at time of declaration

• Second – August 15

• Third – November 15

• Fourth – on or before April 15 of the following calendar year when the final adjusted income tax return is due to be filed.

Personal Income Tax

The deadline for filing of declaration estimated income for the current taxable year is on or before May 15 of the same taxable year.

The payment of the four installments shall be:

• First – May 15

• Second – August 15

• Third – November 15

• Fourth – on or before May 15 of the following calendar year when the final adjusted income tax return is due to be filed.


NIRC

Section 74

Declaration of Income

tax for individuals


Individual taxpayers (except

non-resident alien) and

corporations may elect a

standard deduction not

exceeding 40% of gross

sales/receipts or of gross

income, as the case may be, in

lieu of itemized allowable

deductions.

Personal and Corporate Income Tax

For GPPs and the partners

comprising them, OSD may be

availed only once, i.e., either by

the GPP itself or by the

partners comprising the GPP.


NIRC

Section 34 (L)

Optional Standard

Deduction


The rate of withholding tax on

items of income payable by

payor-corporations/persons

shall be not less than one

percent (1%) but not more than

thirty-two percent (32%).

The tax withheld shall be

credited against the income tax

liability of the taxpayer.

Personal and Corporate Income Tax

Beginning January 1, 2019, the

rate of withholding tax shall be

not less than one percent (1%)

but not more than fifteen

percent (15%).

Revenue Memorandum

Circular No. 1-2018 provides

that the applicable EWT rate on

income payments to self-

employed individuals/

professionals is 8%.


NIRC

Section 57

Withholding of

creditable tax at source


The Philippine Charity

Sweepstakes Office (PCSO) is

among the list of GOCCs,

agencies, or instrumentalities

that are exempt from payment

of corporate income tax.

Corporate Income Tax

PCSO is not anymore exempt

from payment of corporate

income tax.


NIRC

Section 27 (C)

Exemption

Government-owned or

-Controlled

Corporations, Agencies

or Instrumentalities


Interest income received by a

domestic corporation from a

depository bank under the


deposit (EFCD) system is

subject to 7.5% final tax.


The rate of final tax on interest

income received by domestic

corporation under the


deposit system increased from

7.5% to 15% final tax.


NIRC

Section 27 (D)(1)

Final Tax on interest on

foreign currency

deposit


The capital gains tax on net

capital gains realized from sale,

barter, or exchange or other

disposition of shares of stock in

a domestic corporation not

traded through the stock

exchange is:

Not over ₱100,000 – 5%

On any amount in excess of

₱100,000 – 10%


The final tax rate for net capital

gains tax on the sale, barter,

exchange or other disposition

of shares of stock in a domestic

corporation not traded through

the stock exchange is

increased from the 5/10% CGT

to a flat rate of 15% CGT.


NIRC

Section 27 (D)(2)

Capital gains tax on

sale of shares not

traded through the

stock exchange


Every corporation subject to

tax, except foreign corporations

not engaged in trade or

business in the Philippines,

shall render in duplicate, a true

and accurate

• quarterly income tax

return; AND

• Final or adjustment return.



The ITR shall consist a

maximum of four (4) pages in

paper OR electronic form.

It shall also only contain the

information as required in ITRs

of individual taxpayers.

These requirements shall not

affect the implementation of

TIMTA.


NIRC

Section 52

Filing of corporate

income tax return


The return for FWT and the

return for creditable withholding

taxes (EWT returns) shall be

filed within ten (10) days after

the end of each month [Sec.

2.58 of RR No. 2-98)]

Final Withholding Tax and Expanded Withholding

Tax Returns

FWT and EWT returns shall be

filed and the payment made not

later than the last day of the

month following the close of

the quarter during which the

withholding was made.

The provision that the

Commissioner may require the

payment of the taxes withheld

at more frequent intervals is

removed.


NIRC

Section 58

Return and payments

of taxes withheld at

source

Estate Tax


The estate tax rate is based on

a graduated schedule.

Estate Tax

The estate tax rate is fixed at

6% based on the value of the

net estate.


NIRC

Section 84

Rates of estate tax

NET ESTATE TAX

Not over ₱200,000 Exempt

Over ₱200,000

but not over

₱500,000

5% of the excess

over ₱200,000

Over ₱500,000

but not over ₱2M

₱15,000 + 8% of

the excess over

₱500,000

Over ₱2M but not

over ₱5M

₱135,000 + 11%

of the excess over

₱2M

Over ₱5M but not

over ₱10M

₱465,000 + 15%

of the excess over

₱5M

Over ₱10M ₱1,215,000 +

20% of the excess

over ₱10M


The value of the net estate of a resident or citizen is determined by deducting the following from the gross estate:

1. Standard deduction of ₱1,000,000;

2. Expenses, losses, indebtedness, and taxes

a. Funeral expenses

b. Judicial expenses

c. Claims against the estate

d. Claims against insolvent persons

e. Unpaid mortgages

Estate Tax

The following are the allowable

deductions from the gross

estate of a resident or citizen:

1. Standard deduction of

₱5,000,000;

2. Claims against the estate;

3. Claims against insolvent

persons;

4. Unpaid mortgage or

indebtedness on property;


NIRC

Section 86 (A)

Allowable deductions

from the gross estate

of a citizen or resident


5. Property previously taxed;

6. Transfers for public use;

7. Family home in the amount

of ₱1,000,000;

8. Medical expenses, not

exceeding ₱500,000

9. Amount received by heirs

under RA No. 4917

(Retirement benefits of

private firm employees)

Estate Tax


6. Transfers for public use;

7. Family home, in the

increased amount of

₱10,000,000;

8. Amounts received by heirs

under RA No. 4917

(Retirement benefits of

private firm employees)


NIRC

Section 86 (A)



of a citizen or resident


The value of the net estate of a

non-resident is determined by

deducting the following from

the gross estate:

1. Expenses, losses,

indebtedness, and taxes in

proportion to the value of

the entire gross estate

situated in the Philippines;


3. Transfers for public use

Estate Tax

For Non-residents:

1. Standard deduction in the

amount of ₱500,000

2. Value of

• Claims against the estate

• Claims against insolvent

person

• Unpaid mortgages

In proportion to the value of

the entire gross estate

situated in the Philippines

3. Property previously taxed

4. Transfer for public use


NIRC

Section 86 (B)



of a non-resident


No deduction shall be allowed

in the case of a nonresident not

a citizen of the Philippines,

unless the executor,

administrator, or anyone of the

heirs, as the case may be,

includes in the return required

to be filed under Section 90 the

value at the time of his death of

that part of the gross estate of

the nonresident not situated in

the Philippines.

Estate Tax

Miscellaneous provision is

deleted.


NIRC

Section 86 (D)

Miscellaneous

provision for non-

residents


Notice of decedent’s death

shall be filed by the executor,

administrator, or any of the

legal heirs within two months

after death or after qualifying

as such executor or

administrator:

• In all cases of transfers

subject to tax

• In cases where though

exempt from tax, the gross

value of the estate exceeds

₱20,000.

Estate Tax

Requirement for filing of notice

of death is removed.


NIRC

Section 89

Notice of death


Estate tax returns showing a

gross value exceeding

₱2,000,000 shall be supported

with a statement duly certified

by a CPA.

Estate Tax

The threshold amount for the

requirement of attaching a

statement duly certified by a

CPA is increased to

₱5,000,000 (from ₱2,000,000).


NIRC

Section 90

Attachment to Estate

Tax Return - CPA

certification


Estate tax returns shall be filed

within six (6) months from the

decedent’s death.

Estate Tax

The filing of estate tax returns

shall be within one (1) year

from the decedent’s death.


NIRC

Section 90 (B)

Time of filing of estate

tax return


No provision

Estate Tax

In case the available cash of

the estate is insufficient to pay

the total estate tax due,

payment by installment shall be

allowed within two (2) years

from the statutory date of

payment, without civil

penalty and interest.


NIRC

Section 91 (C)

Payment by installment

of estate tax [new]


If a bank has knowledge of the

death of a person, who

maintained a bank deposit

account alone, or jointly with

another, it shall not allow any

withdrawal from the said

deposit account unless the

Commissioner has certified that

the taxes imposed thereon

have been paid.

Estate Tax

If a bank has knowledge of the

death of a person, who

maintained a bank deposit

account alone, or jointly with

another, it shall allow any

withdrawal from the said

deposit account, subject to a

final withholding tax of (6%).


NIRC

Section 97

Payment of tax

antecedent to the

transfer of shares,

bonds, or rights

Donor’s Tax


The donor’s tax for each

calendar year shall be

computed on the basis of the

total net gifts made during the

calendar year in accordance

with the graduated tax table.

Donor’s Tax

The donor’s tax is fixed at 6%

based on annual total gifts

exceeding ₱250,000 (exempt

gift), regardless of whether the

donee is a stranger or not.


NIRC

Section 99

Rates of tax

NET GIFT TAX Not over ₱100,000 Exempt

Over ₱100,000 but not over ₱200,000

2% of the excess over ₱100,000

Over ₱200,000 but not over ₱500,000


₱200,000 Over ₱500,000

but not over ₱1M ₱14,000 + 6% of the excess over

₱500,000

NET GIFT TAX Over ₱1M but not

over ₱3M ₱44,000 + 8% of the excess over

₱1M Over ₱3M but not

over ₱5M ₱204,000 + 10%

of the excess over ₱3M

Over ₱5M but not over ₱10M


₱5M Over ₱10M ₱1,004,000 +

15% of the excess over ₱10M


The donor’s tax shall be 30%

of the net gifts when the donee

or beneficiary is a stranger.

Donor’s Tax

The donor’s tax is fixed at 6%

based on annual total gifts

exceeding ₱250,000 (exempt

gift), regardless of whether the

donee is a stranger or not.


NIRC

Section 99

Rates of tax


The amount by which the fair

market value of the property

transferred exceeded the value

of the consideration received

for such transfer, shall for

purpose of donor’s tax, be

deemed a gift, and included in

computing the amount of gifts

made during the year.

Donor’s Tax

Additional proviso:

Even if the sale, exchange, or

other transfer of property is for

an insufficient consideration,

the same will still be

considered made for

adequate and full

consideration provided that

such transfer is made in the

ordinary course of business,

i.e.:

• a bona fide transaction;

• at arm’s length; and

• free from donative intent.


NIRC

Section 100

Transfer for less than

adequate consideration


Dowries or gifts made on

account of marriage by parents

to each of their legitimate,

recognized, natural, or adopted

children to the extent of the first

₱10,000 shall be exempt from

donor’s tax.

Donor’s Tax

The exemption of dowries (gifts

made on account of marriage)

is removed.


NIRC

Section 101

Exemption of certain

gifts

Value-Added Tax


The following are entitled to

VAT zero-rating:

1. The sale and actual

shipment of goods from the

Philippines to a foreign

country, irrespective of any

shipping arrangement, and

paid for in acceptable

foreign currency or its

equivalent in goods or

services, and accounted for

in accordance with the rules

of the BSP;

Value-Added Tax

The following sales by VAT-

registered persons shall be

subject to zero percent 0%

rate:

1. The sale and actual

shipment of goods from the


country, irrespective of any

shipping arrangement, and

paid for in acceptable

foreign currency or its

equivalent in goods or

services, and accounted for


of the BSP;


NIRC

Section 106 (A)(2)

Zero-rated sale of

goods or properties


Value-Added Tax

2. Sale and delivery of goods

to:

• Registered enterprises

within a separate

customs territory


within enterprise zones

(The above provision was

vetoed by President Duterte

because this go against the

principle of limiting the VAT

zero-rating to direct

exporters.)


NIRC

Section 106 (A)(2)

Zero-rated sale of

goods or properties


2. Sale of raw materials or

packaging materials to a

nonresident buyer for

delivery to a resident local

export-oriented enterprise

to be used in

manufacturing, processing,

packaging or repackaging

and paid for in acceptable

foreign currency and

accounted for in

accordance with the rules

and regulations of the BSP;

Value-Added Tax


packaging materials to a

nonresident buyer for

delivery to a resident local


to be used in

manufacturing, processing,

packaging or repackaging

and paid for in acceptable

foreign currency and

accounted for in

accordance with the rules

and regulations of the BSP;


NIRC

Section 106 (A)(2)

Zero-rated sale of

goods or properties



packaging materials to


whose export sales exceed

seventy percent (70%) of

total annual production;

4. Sale of gold to BSP;

Value-Added Tax


packaging materials to


whose export sales exceed

seventy percent (70%) of

total annual production;


NIRC

Section 106 (A)(2)

Zero-rated sale of

goods or properties


5. Those considered export

sales under Executive

Order No. 226, otherwise

known as the Omnibus

Investment Code of 198,

and other special laws;

6. The sale of goods, supplies,

equipment and fuel to

persons engaged in

international shipping or

international air-transport

operations;

Value-Added Tax

5. Those considered export

sales under Executive

Order No. 226, otherwise

known as the Omnibus

Investment Code of 198,

and other special laws; and

6. The sale of goods, supplies,

equipment and fuel to

persons engaged in

international shipping or

international air-transport;

provided that the goods,

supplies, equipment and

fuel have been sold and

used for international

shipping and air-transport

operations; CONFIDENTIAL SL - 59

NIRC

Section 106 (A)(2)

Zero-rated sale of

goods or properties


Value-Added Tax


Items 3, 4, and 5 shall be subject to 12% VAT and no longer be considered export sales subject to 0% VAT upon the satisfaction of the following conditions:

• There is a successful establishment and implementation of an enhanced vat refund system that grants refunds of creditable input tax within 90 days from the filing of the vat refund application with the Bureau

• All pending VAT refund claims as of December 31, 2017 shall be fully paid in cash by December 31, 2019.


NIRC

Section 106 (A)(2)

Zero-rated sale of

goods or properties


Value-Added Tax

Deleted provision:

The following shall no longer

be subject to 0% VAT:

1. Sale of gold to BSP

2. Foreign-currency

denominated sales


NIRC

Section 106 (A)(2)

Zero-rated sale of

goods or properties


Sale or exchange of services

include “sales of electricity by

generation companies,

transmission, and distribution

companies”.

Value-Added Tax

Sale or exchange of services

include “sales of electricity by

generation companies,

transmission by any entity,

and distribution companies,

including electric

Cooperatives.


NIRC

Section 108 (A)

Definition of sale or

exchange of services



VAT zero-rating:

1. Processing, manufacturing

or repacking goods for other

persons doing business

outside the Philippines

which goods are

subsequently exported,

where the services are paid

for in acceptable foreign

currency and accounted for


and regulations of the

Bangko Sentral ng Pilipinas

(BSP);

Value-Added Tax


VAT zero-rating:

1. Processing, manufacturing

or repacking goods for other

persons doing business

outside the Philippines

which goods are

subsequently exported,

where the services are paid


currency and accounted for


and regulations of the

Bangko Sentral ng Pilipinas

(BSP);


NIRC

Section 108 (B)

Zero-rated sale of

services


2. Services other than those

mentioned in the preceding

paragraph rendered to a

person engaged in business

conducted outside the

Philippines or to a nonresident

person not engaged in

business who is outside the

Philippines when the services

are performed, the

consideration for which is paid


currency and accounted for in

accordance with the rules and

regulations of the Bangko

Sentral ng Pilipinas (BSP);

Value-Added Tax

2. Services other than those

mentioned in the preceding

paragraph rendered to a

person engaged in business

conducted outside the

Philippines or to a nonresident

person not engaged in

business who is outside the

Philippines when the services

are performed, the

consideration for which is paid


currency and accounted for in

accordance with the rules and

regulations of the Bangko

Sentral ng Pilipinas (BSP);


NIRC

Section 108 (B)

Zero-rated sale of

services


3. Services rendered to persons

or entities whose exemption

under special laws or

international agreements to

which the Philippines is a

signatory effectively subjects

the supply of such services to

zero percent (0%) rate;


engaged in international

shipping or international air

transport operations, including

leases of property for use

thereof;

Value-Added Tax


or entities whose exemption

under special laws or

international agreements to

which the Philippines is a

signatory effectively subjects

the supply of such services to

zero percent (0%) rate;



shipping or international air

transport operations, including

leases of property for use

thereof; provided, that these

services shall be exclusively for

international shipping or air

transport operations;


NIRC

Section 108 (B)

Zero-rated sale of

services


5. Services performed by

subcontractors and/or

contractors in processing,

converting, or

manufacturing goods for an

enterprise whose export

sales exceed seventy

percent (70%) of total

annual production are no

longer entitled to VAT zero-

rating.

Value-Added Tax

5. Services performed by

subcontractors and/or

contractors in processing,

converting, or

manufacturing goods for an

enterprise whose export

sales exceed seventy

percent (70%) of total

annual production are no

longer entitled to VAT zero-

rating.


NIRC

Section 108 (B)

Zero-rated sale of

services


6. Transport of passengers

and cargo by domestic air

or sea vessels from the


country;

7. Sale of power or fuel

generated through

renewable sourced of

energy such as but not

limited to biomass, solar,

wind, hydropower,

geothermal, ocean energy,

and other emerging energy

sources using technologies

such as fuel cells and

hydrogen fuels

Value-Added Tax

6. Transport of passengers

and cargo by domestic air

or sea vessels from the


country;

7. Sale of power or fuel

generated through

renewable sourced of

energy such as but not

limited to biomass, solar,

wind, hydropower,

geothermal, ocean energy,

and other emerging energy

sources using technologies

such as fuel cells and

hydrogen fuels


NIRC

Section 108 (B)

Zero-rated sale of

services


Value-Added Tax

8. Services rendered to:


within a separate customs

territory


within tourism enterprise

zones

(Above provision was vetoed

by President Duterte)


NIRC

Section 108 (B)

Zero-rated sale of

services


Value-Added Tax


Items 1 and 5 shall be subject to 12% VAT and no longer be considered export sales subject to 0% VAT upon the satisfaction of the following conditions:

• There is a successful establishment and implementation of an enhanced vat refund system that grants refunds of creditable input tax within 90 days from the filing of the vat refund application with the Bureau

• All pending VAT refund claims as of December 31, 2017 shall be fully paid in cash by December 31, 2019.


NIRC

Section 108 (B)

Zero-rated sale of

services


Value-Added Tax


The Department of Finance shall

establish a VAT Refund Center in

the BIR and BOC that will handle

the processing and granting of

cash refunds or creditable input

tax.

5% of the total VAT collection of the

BIR and BOC from the immediately

preceding year shall be

• automatically appropriated

annually

• treated as a special account in

the General Fund or as trust

receipts

to fund claims for VAT refund.


NIRC

Section 108

Zero-rated sale of

goods or properties

and zero-rated sale of

services


Value-Added Tax


The BIR and BOC shall submit to

the Congressional Oversight

Committee on the Comprehensive

Tax Reform Program a quarterly

report of all pending claims for

refund and unused fund.


NIRC

Section 108

Zero-rated sale of

goods or properties

and zero-rated sale of

services


Sale of real properties not primarily

held for sale to customers or held

for lease in the ordinary course of

trade or business or real property

utilized for low-cost and socialized

housing, residential lot valued at

₱1,919,500 and below; house and

lot, and other residential dwellings

valued at ₱3,199,200 and below.

Value-Added Tax

Sale of real properties not primarily

held for sale to customers or held for

lease in the ordinary course of trade

or business or real property utilized

for low-cost and socialized housing,

residential lot valued at ₱1,500,000

and below; house and lot, and other

residential dwellings valued at

₱2,500,000 and below.

Beginning January 1, 2021:

• the VAT exemption shall not

anymore apply to

– Sale of Low-cost housing

– Sale of residential lot

• The threshold selling price amount

for sale of house and lot, and other

residential dwellings shall be

₱2,000,000


NIRC

Section 109

VAT-exempt

transactions


(Q) Lease of a residential unit

with a monthly rental not

exceeding ₱12,800

(U) Importation of fuel, goods

and supplies by persons


shipping or air transport

operations.

Value-Added Tax

(Q) Lease of residential unit

with monthly rental not

exceeding ₱15,000.

(U) Additional proviso:

xxx Provided, That the fuel,

goods, and supplies shall be

used for international shipping

or air transport operations;


NIRC

Section 109

VAT-exempt

transactions


Value-Added Tax

Additional exempt transactions:

(W) Sale or lease of goods and

services to senior citizens and

persons with disabilities;

(X) Transfer of property pursuant

to Section 40 (C)(2) of the NIRC,

as amended;

(Y) Association dues,

membership fees, and other

assessments and charges

collected by homeowners

associations and condominium

corporations;


NIRC

Section 109

VAT-exempt

transactions


(W) Sale or lease of goods or

properties or the performance of

sevices other than the

transactions specifically

mentioned as VAT-exempt, the

gross annual sales and/or

receipts do not exceed the

amount of ₱1,919,500 (as

amended).

Value-Added Tax

(Z) Sale of gold to the BSP

(AA) Sale of drugs and

medicines prescribed for

diabetes, high cholesterol, and

hypertension beginning January

1, 2019

Now (BB) Sale or lease of goods

or properties or the performance

of services other than the

transactions mentioned in the

preceding paragraphs, the gross

annual sales and/or receipts do

not exceed the amount of

₱3,000,000


NIRC

Section 109

VAT-exempt

transactions


The input tax on the purchase

of capital goods with a cost

exceeding ₱1,000,000 shall be

amortized based on its useful

life or 60 months, whichever is

shorter.

Value-Added Tax

Amortization of input VAT shall

only be allowed until December

31, 2021.

After such date, taxpayers with

unutilized input vat on capital

goods purchased or imported

shall be allowed to apply the

same as scheduled until fully

utilized.


NIRC

Section 110 (A)(2)(b)

Amortization of input

VAT from purchases of

capital goods


The Commissioner shall grant a

refund or issue a tax credit

certificate for creditable input

taxes within 120 days from the

date of submission of complete

documents.

Value-Added Tax

• The period of granting by the

Commissioner of refunds is

decreased to 90 days (from

120 days) from the date of

submission of complete

documents in support of the

application.

• The granting of tax credit

instead of refund is removed.

Additional proviso:

Should the Commissioner find

that the grant of refund is not

proper, the Commissioner must

state in writing the legal and

factual basis for the denial. CONFIDENTIAL SL - 77

NIRC

Section 112

Refunds or tax credits of

input VAT


Failure on the part of the

Commissioner to act on the

application within the period

prescribed shall be deemed a

denial of the application.

Value-Added Tax

The deemed denial of failure to

act on the application is

removed.

Additional proviso:

Failure on the part of any

official, agent, or employee of

the BIR to act on the

application within the ninety

(90)-day period shall be

punishable under Section 269

of the Tax Code (administrative

fine and imprisonment).


NIRC

Section 112

Refunds or tax credits of

input VAT


VAT taxpayers shall file

quarterly returns within 25 days

following the close of each

taxable quarter, while payment

of the VAT shall be made on a

monthly basis upon filing of

monthly VAT declaratin.

Value-Added Tax

Beginning January 1, 2023, the

filing and payment shall be

done within 25 days following

the close of each taxable

quarter.


NIRC

Section 114 (A)

Return and payment of

VAT

Other Percentage Taxes


Cooperatives are exempt from

the 3% gross receipts tax.


Additional exemption:

Beginning January 1, 2019, self-employed and professionals with total annual gross sales and/or gross receipts not exceeding ₱500,000 shall be exempt from the 3% gross receipts tax.

(The above provision was vetoed by President Duterte because the proposed exemption will result in unnecessary erosion of revenues and would lead to abuse and leakages.)


NIRC

Section 116

3% gross receipts tax

of persons exempt

from the VAT


Sale, barter or exchange of

shares of stock listed and

traded through the local stock

exchange shall be subject to a

tax of ½ of 1% of the gross

selling price or gross value in

money of the shares of stock

sold, bartered, exchanged or

otherwise disposed.


The rate of the stock

transaction tax is increased to

6/10 of 1%.


NIRC

Section 127

Stock transaction tax

Excise Taxes


Excise taxes apply to goods

manufactured or produced in

the Philippines for domestic

sales or consumption or for any

other disposition and to things

imported.

Excise Taxes

Excise tax shall also be

imposed to services performed

in the Philippines.


NIRC

Section 129

Goods and services

subject to excise taxes


Excise Taxes


Section 145 (B) and

(C)

Excise tax on

cigarettes packed by

hand and by machine

The rates of excise tax shall be increased by 4% every year

effective January 1, 2024, through revenue regulations issued by

the Secretary of Finance.

Duly registered cigarettes packed by hand shall only be packed

in 20s [previously allowed in 30s] and other packaging

combinations of not more than 20.

Effective Tax

Jan 1, 2018 – Jun 30, 2018 ₱32.50 per pack

Jul 1, 2018 – Dec 31, 2019 ₱35.00 per pack

Jan 1, 2020 – Dec 31, 2021 ₱37.50 per pack

Jan 1, 2022 – Dec 31, 2023 ₱40.00 per pack

NIRC Provision

Excise Taxes


Section 148

Excise tax on

petroleum products

Manufactured Oils

and Other Fuels NIRC

Effective

1-Jan-2018 1-Jan-2019 1-Jan-2020

Lubricating oils and

greases (per liter)

₱ 4.50 ₱ 8.00 ₱ 9.00 ₱ 10.00

Processed gas (per

liter)

0.05 8.00 9.00 10.00

Waxes and petroleum

(per kg)

3.50 8.00 9.00 10.00

Denatured alcohol

(per liter)

0.05 8.00 9.00 10.00

Naphtha, regular

gasoline, pyrolysis

gasoline and other

similar products of

distillation (per liter)*

4.35 7.00 9.00 10.00

*Provided that the production of petroleum products, whether or not classified as

products of distillation and use solely for production of gasoline shall be exempt from

excise tax.

TRAIN NIRC

NIRC Provision

Excise Taxes


Section 148

Excise tax on

petroleum products

Manufactured Oils

and Other Fuels NIRC

Effective

1-Jan-2018 1-Jan-2019 1-Jan-2020

Leaded premium

gasoline (per liter)

₱ 5.35 No provision No provision No provision

Unleaded premium

gasoline (per liter)

4.35 ₱ 7.00 ₱ 9.00 ₱ 10.00

Aviation turbo jet fuel

(per liter)

3.67 4.00 4.00 4.00

Kerosene (per liter) 0.00 3.00 4.00 5.00

Diesel fuel oil (per

liter)

0.00 2.50 4.50 6.00

Liquefied Petroleum

Gas (per liter)

0.00 1.00 2.00 3.00

Asphalt (per kg) 0.56 8.00 9.00 10.00

Bunker fuel oil (per

liter)

0.00 2.50 4.50 6.00

Petroleum coke (per

metric ton)*

No provision 2.50 4.50 6.00

*Provided, however, that, petroleum coke, when used as feedstock to any power

generating facility, per metric ton, is ₱0.00

TRAIN NIRC


Excise Taxes


Section 148

Excise tax on

petroleum products

Additional proviso:

Naphtha and pyrolisis gasoline will also be subject to zero excise tax when used in the refining of petroleum products.

The production of petroleum products, whether or not they are classified as products of distillation and for use solely for the production of gasoline shall be exempt from excise Tax.

Liquefied petroleum gas when used as raw material in the production of petrochemical products, subject to the rules and regulations to be promulgated by the Secretary of Finance, shall be taxed zero per kilogram.

The excise taxes paid on the purchased basestock (bunker) used in the manufacture of excisable articles and forming part thereof shall be credited against the excise tax due therefrom.

Petroleum coke is now subject to excise tax. But, when used as feedstock to any power generating facility, it shall be taxed at zero per metric ton.


Excise Taxes


Section 148

Excise tax on

petroleum products

Additional proviso:

Zero excise tax for Petroleum products, including naphtha, LPG,

petroleum coke, refinery fuel and other products of distillation,

when used as input, feedstock or as raw material

• in the manufacturing of petrochemical products, or

• in the refining of petroleum products,

or as replacement fuel for natural-gas-fired-combined cycle power

plant

(The above provision was vetoed by President Duterte

because of the risk of being too general which may be

subject to abuse by taxpayers.)


No provision

Excise Taxes

The Secretary of Finance shall

require the use of an official

fuel marking or similar

technology on petroleum

products that are refined,

manufactured or imported into

the Philippines, and that are

subject to the payment of taxes

and duties.


NIRC

Section 148-A

Marking of petroleum

products [new]


No provision

Excise Taxes

Absence of official or dilution of

the official marker on petroleum

products shall raise the

presumption that the products

were withdrawn with the

intention to evade the payment

of the taxes and duties thereon.

The use of fraudulent marker

on the petroleum products shall

be considered prima facie

evidence that the same have

been withdrawn or imported

without the payment of taxes

and duties due thereon.


NIRC

Section 148-A

Marking of petroleum

products [new]


Excise Taxes

Effective January 1, 2018:


NIRC

Section 149

Excise tax on

automobiles

Hybrid vehicles shall be

subject to 50% of the

applicable taxes.

Purely electric vehicles and

pickups shall be exempt from

excise tax on automobiles.

Over/Up to Excise Tax

Rate

Up to 600,000 4%

Over 600,000

Up to 1,000,000

10%

Over 1,000,000

Up to 4,000,000

20%

Over 4,000,000 50%

Over/Up to Excise Tax

Rate

Up to 600,000 2%

Over 600,000

Up to 1,100,000

12,000 + 20%

of value in

excess of

600,000

Over 1,100,000

Up to 2,100,000

112,000 + 40%

of value in

excess of

1,100,000

Over 2,100,000 512,000 + 60%

of value in

excess of

2,100,000


Excise Taxes

Hybrid electric vehicle — a

motor vehicle powered by

electric energy, with or without

provision for off-vehicle

charging, in combination with

gasoline, diesel, or any other

motive power, and one that

must be able to propel itself

from a stationary condition

using solely electric motor.


NIRC

Section 149

Excise tax on

automobiles


No provision

Excise Taxes

Invasive cosmetic procedures,

surgeries, and body enhancements

for aesthetic reasons shall be

subject to 5% excise tax based on

the gross receipts derived from

the performance of services, net of

excise tax and VAT.

Body enhancements shall refer to

those:

• Directed solely towards

improving, altering or enhancing

a patient’s appearance,

• That do not meaningfully

promote the function of the body

or prevent or treat illness or

disease.


NIRC

Section 150-A

On non-essential

services [new]


Excise Taxes

The tax shall not apply to nor

cover:

1. Procedures necessary to

ameliorate a deformity arising

from, or directly related to:

• a congenital or

developmental defect or

abnormality

• a personal injury resulting

from an accident or

trauma

• a disfiguring disease,

tumor, virus or infection

2. Cases or treatments covered

by the National Health

Insurance Program


NIRC

Section 150-A

On non-essential

services [new]


No provision

Excise Taxes

Effective January 1, 2018:


NIRC

Section 150-B

On sweetened

beverages [new] Basis

Tax (Per Liter

of Volume

Capacity)

Sweetened

beverages using

• purely caloric

sweeteners and

• purely non-caloric

sweeteners, or

• a mix of caloric

and non-caloric

sweeteners

₱ 6.00

Sweetened

beverages using

purely high fructose

corn syrup or in

combination with any

caloric or non-caloric

sweetener

₱ 12.00


No provision

Excise Taxes

The rate of ₱6.00 shall not

apply to sweetened beverages

using high fructose corn

syrup

Exempt: Sweetened

beverages using

1. purely coconut sap sugar

2. purely steviol glycosides


NIRC

Section 150-B

On sweetened

beverages [new]


No provision

Excise Taxes

Sweetened beverages – non-

alcoholic beverages of any

constitution (liquid, powder, or

concentrates) pre-packaged

and sealed according to FDA

standards, containing caloric

and/or non-caloric sweeteners

added by the manufacturers.


NIRC

Section 150-B

On sweetened

beverages [new]


No provision

Excise Taxes

List of sweetened beverages

(not exclusive):

1. Sweetened juice drinks

2. Sweetened tea

3. All carbonated beverages

4. Flavored water

5. Energy and sports drink

6. Other powdered drinks not

classified as milk, juice, tea,

and coffee

7. Cereal and grain beverages

8. Other non-alcoholic

beverages that contain

added sugar


NIRC

Section 150-B

On sweetened

beverages [new]


No provision

Excise Taxes

Excluded products:

1. All milk products, including

plain milk, infant formula milk,

follow-on milk, and growing up

milk, powdered milk, ready to

drink milk and flavored milk,

fermented milk, soymilk, and

flavored soymilk

2. 100% natural fruit juices

3. 100% natural vegetable juices

4. Meal replacement and

medically indicated beverages

5. Ground coffee, instant soluble

coffee, and pre-packaged

powdered coffee products (with

or without added sugar)


NIRC

Section 150-B

On sweetened

beverages [new]


No provision

Excise Taxes

Penalties and fines for misrepresentation or misdeclaration in the required Manufacturer’s or Producer’s Sworn Statement

• summary cancellation or withdrawal of the permit to engage in business as manufacturer or importer of sweetened beverages

• For corporation, association, or partnership: fine of triple the amount of deficiency taxes, surcharges, and interest

• Criminal liability

• For non-resident: immediate deportation after serving sentence


NIRC

Section 150-B (D)(2)

Manufacturer’s or

Producer’s Sworn

Statement


Excise Taxes


NIRC

Section 151

Excise tax on mineral

products

Mineral Products Tax

Coal and coke ₱10 per

metric ton

Nonmetallic mineral

and quarry

resources

2%

Copper and other

metallic minerals

2%

Gold and chromite 2%

Indigenous

petroleum

3%

Mineral Products Tax

Domestic and

imported Coal and

coke,

notwithstanding any

incentives granted

in any law or special

law

Per metric

ton:

2018 – ₱50

2019 – ₱100

2020 – ₱150

Nonmetallic mineral

and quarry

resources

4%

Copper and other

metallic minerals

4%

Gold and chromite 4%

Indigenous

petroleum

6%


Manufacturers of articles

subject to excise tax shall

provide themselves with

counting or metering devices to

determine as accurately as

possible the volume, quantity,

or number of the articles

produced, to be complied with

before commencement of

operations.

Excise Taxes

Importers are likewise

required to provide themselves

with such Bureau-accredited

counting or metering devices to

determine volume, quantity or

number of articles imported.


NIRC

Section 155

Mandatory metering

devices

Documentary Stamp Tax


Documents subject to DST NIRC TRAIN

Section 174

Original issue of shares of

stock

₱1.00 on each ₱200.00 or

fractional part thereof of the

par value

₱2.00 on each ₱200.00 or


par value

Section 175

Sale or transfer of shares or

certificates of stock

₱0.75 on each ₱200 of


par value

For no par value stock: 25%

of the DST paid upon original

issue

₱1.50 on each ₱200 or


par value

For no par value stock: 50%

of the DST paid upon original

issue

Section 177

Certificates of Profits or

Interest in Property or

Accumulations

₱0.50 on each ₱200 or


face value of the certificate or

memorandum

₱1.00 on each ₱200 or


face value of the certificate or

memorandum



Section 178

Bank Checks, Drafts,

Certificates of Deposits not

bearing interest, and other

instruments

₱1.50 on every document ₱3.00 on every document

Section 179

All Debt Instruments

₱1.00 on each ₱200.00 or


issue price of debt instrument

₱1.50 on each ₱200.00 or


issue price of debt instrument

Section 180

All Bills of Exchange or Drafts

₱0.30 on each ₱200 or


face value

₱0.60 on each ₱200 or


face value

Section 181

Acceptance of bills of

exchange and others

₱0.30 on each ₱200 or


face value

₱0.60 on each ₱200 or


face value



Section 182

Foreign bills of exchange and

letters of credit

₱0.30 on each ₱200 or


face value

₱0.60 on each ₱200 or


face value

Section 183

Life Insurance Policies

Not over ₱100,000 Exempt Exempt


₱300,000

₱10.00 ₱20.00


₱500,000

₱25.00 ₱50.00


₱750,000

₱50.00 ₱100.00


₱1,000,000

₱75.00 ₱150.00

Over ₱1,000,000 ₱100.00 ₱200.00



Section 186

Policies of Annuities and Pre-

need plans

For policies of annuities –

₱0.50 on each ₱200 or a


premium or installment

payment on contract price

collected

For pre-need plans – ₱0.20

on each ₱200 or fractional

part thereof of the premium or

contribution collected

For policies of annuities –

₱1.00 on each ₱200 or a


premium or installment

payment on contract price

collected

For pre-need plans – ₱0.40

on each ₱200 or fractional

part thereof of the premium or

contribution collected

Section 188

Certificates

₱15.00 on each certificate ₱30.00 on each certificate

Section 189

Warehouse receipts

₱15.00 on each ₱30.00 on each



Section 190

Jai-alai, Horse Race tickets,

lotto, or other authorized

number games

₱0.10 on each ticket + ₱0.10

on every ₱1.00 or a fractional

part thereof of the cost of the

ticket in excess of ₱1.00

₱0.20 on each ticket + ₱0.20

on every ₱1.00 or a fractional

part thereof of the cost of the

ticket in excess of ₱1.00

Section 191

Bills of Lading or receipts

Goods: over ₱100 but not

over ₱1,000

₱1.00 ₱2.00

Goods: over ₱1,000 ₱10.00 ₱20.00

Section 192

Proxies

₱15.00 on each proxy ₱30.00 on each proxy

Section 193

Powers of Attorney

₱5.00 on each power of

attorney

₱10.00 on each power of

attorney



Section 194

Leases and other Hiring

Agreements

₱3.00 for the first ₱2,000 or

fractional part thereof, +

₱1.00 every additional

₱1,000, for each year of the

term of said contract

₱6.00 for the first ₱2,000 or

fractional part thereof, +

₱2.00 every additional

₱1,000, for each year of the

term of said contract

Section 195

Mortgages, Pledges and

Deeds of Trust

Amount secured:

Not over ₱5,000 ₱20.00 ₱40.00

On each ₱5,000 or

fractional part thereof in

excess of ₱5,000

₱10.00 ₱20.00



Section 196

Deeds Donation of Real

Property

No DST ₱15.00 for the first ₱1,000,

plus ₱15.00 for every

additional ₱1,000 or fraction

thereof of the consideration to

be paid or FMV, whichever is

higher

Transfers exempt from

donor’s tax:

Exempt from DST



Section 197

Charter parties and similar

instruments

₱500 if the registered gross

tonnage is not over 1,000 tons

plus ₱50 for every additional

month or a fraction thereof in

excess of 6 months

₱1,000 if the registered gross

tonnage is not over 1,000 tons



excess of 6 months


tonnage is over 1,000 tons but

not over 10,000 tons plus ₱100

for every additional month or a

fraction thereof in excess of 6

months


tonnage is over 1,000 tons but

not over 10,000 tons plus ₱200

for every additional month or a

fraction thereof in excess of 6

months


tonnage exceeds 10,000 tons



excess of 6 months


tonnage exceeds 10,000 tons



excess of 6 months

Administrative Provisions


All corporations, companies,

partnerships, or persons

required by law to pay internal

revenue taxes shall keep a

journal and a ledger.

Those whose quarterly sales,

earnings, receipts, or output do

not exceed ₱50,000 shall keep

and use simplified set of

bookkeeping records.


All corporations, companies,

partnerships, or persons

required by law to pay internal

revenue taxes shall keep and

use relevant and appropriate

set of bookkeeping records

duly authorized by the

Secretary of Finance.


NIRC

Section 232

Keeping of books of

accounts


Those whose gross quarterly

sales, earnings, receipts or

output exceed ₱150,000 shall

have their books of accounts

audited and examined yearly

by independent Certified Public

Accountants (CPAs) and their

ITRs accompanied with a duly

accomplished Account

Information Form (AIF).


Those whose gross annual

sales, earnings, receipts or

output exceed ₱3,000,000

shall have their books of

accounts audited and

examined yearly by

independent CPAs and their

ITRs accompanied with a duly

accomplished AIF.


NIRC

Section 232

Keeping of books of

accounts


The taxpayer’s registration

shall contain the information as

may be required by the

Commissioner in the form

prescribed

Persons required to register for

VAT: those whose gross

receipts

• for the past 12 months have

exceeded ₱1,500,000


Additional proviso:

The Commissioner shall

simplify the business

registration and tax compliance

requirements of self-employed

individuals and/or

professionals.

Threshold amount is increased

to ₱3,000,000.


NIRC

Section 236

Registration

Requirements


• for the next 12 months can

be reasonably believe to

exceed ₱1,500,000

Any person not required to

register for VAT may elect to

register for VAT.


Additional proviso:

Any taxable individual who

elects to pay the 8% tax on

gross sales or receipts shall

not be allowed to avail of

optional VAT registration.


NIRC

Section 236

Registration

Requirements


A duly-registered receipt or

sales or commercial invoice,

prepared at least in duplicate,

shall be issued for each sale of

merchandise or service

rendered valued at ₱25 or

more.


It is expressly provided that the

issuance of the receipt or

invoice shall be made at the

point of sale.

The threshold amount is

increased to ₱100.00.


NIRC

Section 237

Receipts or Invoices




Within 5 years from the effectivity

of the law and upon the

establishment of the necessary

storing and processing system,

the following shall be required to

issue electronic receipts or

sales or commercial invoices in

lieu of manual receipts/invoices:

• taxpayers engaged in the

export of goods and services

• taxpayers engaged in e-

commerce, and

• taxpayers under the

jurisdiction of the Large

Taxpayers Service


NIRC

Section 237




Other taxpayers may also opt

to issue electronic

receipts/invoices in lieu of

manual ones.

The digital record of electronic

receipts/invoices shall be kept

by the purchaser, customer or

client and the issuer for a

period of 3 years from the close

of the taxable year.


NIRC

Section 237



No provision


The taxpayers that will be

mandated under Section 236 to

issue electronic

receipts/invoices shall be

required to electronically

report their sales data to the

BIR through the use of

electronic point of sales

systems.

The machines, fiscal devices,

and fiscal memory devices

shall be at the expense of the

taxpayers.


NIRC

Section 237 (A)

Electronic Sales

Reporting System

[new]

Penalties


20% interest on any unpaid

amount of tax from the date

prescribed for payment until the

amount is fully paid

Penalties

General interest on unpaid

amount of tax is changed to

12% (at double the rate of legal

interest rate for loans or

forbearance of any money in

the absence of an express

stipulation as set by the BSP;

prevailing BSP-set legal

interest is 6%)

Additional proviso:

Deficiency and delinquency

interest shall in no case be

imposed simultaneously.


NIRC

General Interest


Deficiency interest is assessed

and collected from the date

prescribed for its payment until

full payment thereof.

Penalties

The period when deficiency

interest shall stop to run is until

full payment OR upon issuance

of a notice and demand by the

BIR Commissioner, whichever

comes earlier.


NIRC

Deficiency interest


Any person who willfully

attempts in any manner to

evade or defeat any tax

imposed under this Code or the

payment thereof shall, in

addition to other penalties

provided by law, upon

conviction thereof, be punished

by a fine of not less than

₱30,000 but not more than

₱100,000 and suffer

imprisonment of not less than 2

years but not more than 4

years

Penalties

Administrative Fine is

increased to not less than

₱500,000 but not more than

₱10,000,000

Imprisonment is increased to

not less than 6 years but not

more than 10 years


NIRC

Section 254

Attempt to evade or

defeat tax


Any person who:

• fails or refuses to issue

receipts/invoices

• issues receipts/invoices that

do not truly reflect required

information

• uses multiple or double

receipts or invoices

shall upon conviction be

punished by a fine of not less

than ₱1,000 but not more than

₱50,000 and suffer


years but not more than 4

years

Penalties

Same


NIRC

Section 264

Failure or refusal to

issue receipts or

invoices


Fine of not less than ₱1,000 but

not more than ₱50,000 and


years but not more than 4 years

for any person who:

• Print receipts/invoices without

authority from the BIR

• Print double or multiple sets of

invoices or receipts

• Print unnumbered

receipts/invoices not bearing

the name, business style, TIN

and business address of the

entity

Penalties

Administrative Fine is increased

to not less than ₱500,000 but

not more than ₱10,000,000

Imprisonment is increased to not

less than 6 years but not more

than 10 years

Additional punishable offense:

Printing of other fraudulent

receipts or sales or commercial

invoices


NIRC

Section 264

Failure or refusal to

issue receipts or

invoices


No provision

Penalties

Any taxpayer required to

transmit sales data to the BIR’s

electronic sales reporting

system but fails to do so, shall

pay:

For each day of violation:

1/10 of 1% of the annual net

income as reflected in the

Audited FS for the second year

preceding the current taxable

year OR ₱10,000, whichever is

higher.


NIRC

Section 264-A

Failure to Transmit

Sales Data Entered on

Cash Register

Machine/Point of Sales

System (POS)

Machines to the BIR’s

Electronic Sales

Reporting System

[new]


No provision

Penalties

IF the aggregate number of

days of violation exceed 180

days within a taxable year,

additional penalty shall be:

permanent closure of the

Taxpayer

The penalty shall not apply if

the failure to transmit is due to

force majeure or any causes

beyond the control of the

taxpayer


NIRC

Section 264-A

Failure to Transmit

Sales Data Entered on

Cash Register

Machine/Point of Sales

System (POS)

Machines to the BIR’s

Electronic Sales

Reporting System

[new]


No provision

Penalties

Covered person shall be any

person who purchase, use,

possess, sell or offer to sell, install,

transfer, update, upgrade, keep, or

maintain such automated sales

suppression device or software

designed for or is capable of:

• Suppressing the creation of

electronic records of sale

transactions that a taxpayer is

required to keep under existing

tax laws and/or regulation; or

• Modifying, hiding, or deleting

electronic records of sales

transactions and providing a

ready means of access to them.


NIRC

Section 264-B

Sales suppression

devices [new]


No provision

Penalties

Penalty:

Administrative Fine of not less

than ₱500,000 but not more

than ₱10,000,000 and

imprisonment of not less than

2 years but not more than 4

years.

Cumulative suppression of

electronic sales record in

excess of ₱50,000,000 shall be

considered as economic

sabotage and shall be subject

to maximum penalty.


NIRC

Section 264-B

Sales suppression

devices [new]


No provision

Penalties

Additional punishment for all

offenses relating to fuel marking:

a. Any person engaged in the

sale, trade, delivery,

distribution or transportation

of unmarked fuel in

commercial quantity held for

domestic use or merchandise

(upon conviction)

b. Any person who:

• causes the removal of the

official fuel marking agent

from marked fuel, and the

adulteration or dilution of

fuel intended for sale to the

domestic market, or


NIRC

Section 265-A

Offenses relating to

fuel marking


No provision

Penalties

• knows the possession,

storage, transfer or offer for

sale of fuel obtained as a

result of such removal,

adulteration or dilution


NIRC

Section 265-A


fuel marking

First

offense ₱2,500,000

Second

offense ₱5,000,000

Third

offense ₱10,000,000, plus

revocation of license to

engage in any trade or

business


No provision

Penalties

c. Fine of not less than

₱1,000,000 but not more

than ₱5,000,000 AND

imprisonment of not less

than 4 years but not more

than 8 years for any person

who commits any of the

following acts:

• Making, importing, selling,

using or possessing fuel

markers without express

authority

• Making, importing, selling,

using or possessing

counterfeit fuel markers


NIRC

Section 265-A


fuel marking


No provision

Penalties

d. Fine of not less than

₱5,000,000 but not more

than ₱10,000,000 AND

imprisonment of not less

than 4 years but not more

than 8 years for any person

who willfully inserts, places,

adds or attaches whatever

quantity of any unmarked

fuel, counterfeit additive or

chemical in the person,

house, effects, inventory, or

in the immediate vicinity of an

innocent individual for the

purpose of implicating,

incriminating or imputing the

commission of any violation

herein.


NIRC

Section 265-A


fuel marking


No provision

Penalties

e. Any person authorized,

licensed or accredited to

conduct fuel tests, who issues

false or fraudulent fuel test

results knowingly, willfully, OR

through gross negligence, shall

suffer additional penalty of

imprisonment from 1 year and

1 day to 2 years and 6 months

Additional penalties that may be

imposed by the court:

• Revocation of the license to

practice profession In case of a

practitioner

• Closure of the fuel testing facility


NIRC

Section 265-A


fuel marking


No provision

Penalties

Additional punishable offense:

(j) Deliberate failure to act on

the application for VAT refunds

within the prescribed period.


NIRC

Section 269

Violations committed

by Government

Enforcement Officers

MAKATI Citibank Tower

8741 Paseo de Roxas

Makati City 1226 Philippines

Trunk: +632.982.9100

Fax: +63 2 982 9111

[email protected]

CEBU Ayala Life-FGU Center

Mindanao Avenue cor. Biliran Road,

Cebu City 6000 Philippines.

Trunk: +6332.266.7826

Fax: +6332.266.5157

[email protected]

DAVAO Landco Building

J.P. Laurel Avenue,

Davao City 8000 Philippines

Trunk: +6382.221.7826

Fax: +6382.221.4336

[email protected]

ILOILO Eon Centennial Plaza Hotel

Ledesma cor. Jalandoni St.

Iloilo City 5000 Philippines

Trunk: +6333.337.2277 loc. 611

[email protected]

www.reyestacandong.com