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TRAIN Law 2018

President Duterte signed Republic Act No. 10963, otherwise known as, the Tax Reform Acceleration and Inclusion Act (“TRAIN”) last 19 December 2017, amending portions of the National Internal Revenue Code of 1997.

Briefly, the TRAIN Law amended income tax coverage, estate tax, donor’s tax, excise tax on petroleum, automobiles, coal, mining and tobacco, value-added tax, passive income and other taxes. The law also imposed new taxes on sweetened beverages and cosmetic procedures solely towards altering or enhancing appearance.

The TRAIN law is the first among several tax reform measures of the administration. Under this law, the burden of personal income tax rates will be shifted from lower-income segments, toward those of higher income segments. Essentially, individuals with personal income worth P 250,000.00 and below will have 0% tax, while with a personal income of P8 million and above will be taxed 35%. However, the projected revenues from the lower income tax will be offset by higher excise levies on petroleum, automobiles, and sweetened beverages, among others.

According to the Department of Finance, “the goal of the first package of the Comprehensive Tax Reform Program (CTRP) or TRAIN is to create a simpler, fair, and more efficient system, as per the constitution, where the rich will have a bigger contribution and the poor will benefit more from the government’s programs and services.”

For more information on the implementation of the TRAIN Law, you may visit the Department of Finance website at: http://www.dof.gov.ph/taxreform/.