2ND PUBLIC ACCREDITED TAX SEMINAR

ALL ABOUT TRAIN & RELATED

UPDATES ON THE IMPLEMENTATION
04.06-18 [FRIDAY 1-5 P.M.] [ASIAN INSTITUTE OF MANAGEMENT MAKATI CITY]
Atty. Willie B. Santiago, CPA
 OUTLINE
• I. REVISIT OF HIGHLIGHTS OF TRAIN
1 & RELATED UPDATES ON THE
IMPLEMENTATION
– Income Tax
– Estate & Donor’s Tax
– Withholding Tax Rules
– Excise [Sweetened Beverage + Cosmetic
Procedures]
– VAT & Percentage Tax
– DST
• II. ALL ABOUT TRAIN 2 & RELATED UPDATES-
AS VALUE ADDED PRESENTATION
A. INDIVIDUAL INCOME & RETURNS & PAYMENT
AMENDMENTS INTRODUCED BY
OLD TAX CODE TRAIN LAW

 Below Php 10,000.00 taxed at 5%  Below Php 250,000.00 no tax

 Over Php 500,000.00 taxed at 32%  Over Php 8 Million taxed at 35%
 No counter-part provision  Optional for self-employed &
professionals to be taxed at 8% for
gross revenues below Php 3Million

 Personal exemption-Php 50,000.00

No more Personal & Additional
 Additional exemption-Php 25,000.00
per child exemptions

No counter-part Minimum wage earners receiving

holiday pay etc. still exempt from
provision income tax
MINIMUM WAGE EARNER
PURELY COMPENSATION INCOME EARNER
SELF-EMPLOYED & PROFESSIONALS
THOSE NOT EXCEEDING
PHP 3 MILLION THRESHOLD
8% tax on gross sales/receipts & other non-operating
income in excess of ₱250,000.00 in lieu of graduated
income tax rates & percentage tax

or
graduated income tax rates
 BOTH COMPENSATION INCOME EARNER &
SELF-EMPLOYED/PROFESSIONAL
COMPENSATION INCOME SUBJECT TO GRADUATED
INCOME TAX RATES

Income from business or practice of profession shall

be subject to the ff:

If the gross sales/receipts & other non-operating

income do not exceed PHP 3M, optional to avail the 8%

If it exceeds PHP 3M, use graduated income tax rates

 AMENDMENTS INTRODUCED BY
OLD TAX CODE TRAIN LAW

Tax exempt 13th Month Pay & Other

Benefits including Productivity Incentives &
Increase to Php
Christmas Bonus-Php 82,000.00 90,000.00

Employees of RHQ, ROHQ, OBU, & Preferential tax treatment of 15% shall not
Petroleum Service Contractors taxed at apply anymore to registrants after January
15% 1, 2018

Fringe Benefit Tax-32% Fringe Benefit Tax-35%

Returns to consist of maximum of 4 pages

None showing personal profile & information,
gross revenues, allowable deductions,
taxable income, income tax due & payable
 Deadline for 1st Quarter & Annual ITR-
April 15  May 15
 Deadline for 2nd Instalment of Annual  October 15
Income Tax Due-July 15
RHQs, ROHQs, OBUs & PETROLEUM SERVICE
CONTRACTORS/SUBCONTRACTORS
FRINGE BENEFITS
OPTIONAL STANDARD DEDUCTIONS
OSD FOR GPPs & PARTNERS
C. PASSIVE INCOME
AMENDMENTS INTRODUCED BY
OLD TAX CODE TRAIN LAW

PCSO & Lotto Winnings- Taxable above Php

exempt 10,000.00

Interest income on foreign 15% whether recipient is

currency denominated units- individual or domestic
7.5% corporation

Capital gains tax on unlisted shares-5%

for 1st Php100,000.00 net capital gains
Flat tax rate of
realized & 10% in excess of Php
100,000.00 15%
 D. REGISTRATION UPDATES
• Option of non-VAT TP
contemplating to avail of the 8%
• file BIR Form 1905/Update Reg. Form
• SAMPLE\1905-OLD BIR FORM & PROCESSES.pdf
• SAMPLE\1905-NOVEMBER 2014.pdf

• At the beginning of TY or
– before the due date for filing of PT
• If unable to timely update
– file PT with zero amount
• If non-VAT TP opted
to be taxed under

graduated
income tax
• Shall file PTR
• If initially presumed not
to exceed the VAT threshold

• but actually exceeded

• Shall update the registration

• within the month ff the month

• where income exceeded the 3M
threshold
 MARCH 31, 2018 DEADLINE
FURTHER CLARIFIED
• all existing VAT registered TP
• whose gross sales/receipts in the preceding
year did not exceed the VAT threshold of 3M
• have the option to update their registration to
non-VAT
• SAMPLE\BIR TAX ADVISORY ON SELF-EMPLOYED
PROFESSIONALS CHANGE OF REGISTRATION FROM VAT TO
NON-VAT PERCENTAGE TYPE.pdf
• SAMPLE\BIR TAX ADVISORY ON VAT TO NON VAT UPDATE
UNTIL APRIL 2.pdf
 ESTATE &
DONOR’S TAX
 RELATED BIR ISSUANCE ON
IMPLEMENTATION
• SAMPLES\9-2018-NEW ALPHANUMERIC TAX
CODE.pdf
• SAMPLES\RR NO. 12-2018 CONSOLIDATED
REGULATIONS ON ESTATE & DONORS TAX
PROVISIONS OF TRAIN LAW.pdf
ESTATE TAX LAW COMPARATIVES
AMENDMENTS INTRODUCED BY
OLD TAX CODE TRAIN LAW

Progressive at 5% to 20% Flat rate of 6%

Standard deduction of
Php 5M/Php 500,000 for
resident/citizen estate of Php 1M
& none for non-resident
non-resident

Family home Php1 Million Php10 Million

 AMENDMENTS INTRODUCED BY
OLD TAX CODE TRAIN LAW

Expenses, Losses, Indebtedness, Taxes:

actual funeral expense, or an amount
equal to 5% of the gross estate,
whichever is lower, but in no case to None
exceed Php 200,000 + Judicial
Expenses of the testamentary or
intestate proceedings.

Miscellaneous Provisions: no
deduction shall be allowed in the case
of a nonresident-citizen estate of PH, No counterpart
unless the value of that part of the
provisions
gross estate not situated in PH
Philippines is included in the return
 AMENDMENTS INTRODUCED BY
OLD TAX CODE TRAIN LAW

Medical expenses incurred within one

(1) year before death not exceeding None
Php 500,000

Notice of Death to be filed within

two (2) months
None

CPA Certification needed at Php

2M
Php 5M
 AMENDMENTS INTRODUCED BY
OLD TAX CODE TRAIN LAW

Bank shall not allow any withdrawal

from the decedent’s deposit account,
unless the CIR has certified that the Bank shall allow any withdrawal
taxes imposed have been paid: from the said deposit account,
Provided, that the administrator or subject to a final withholding tax
any 1 of the heirs may withdraw an of 6%
amount not exceeding Php 20,000
without the said certification

Estate tax return filing deadline-

within 6 months from the date of 1 year
death

Payment by installment in two (2)

No counterpart provisions years in case of insufficient cash
without civil penalty & interest
 GOVERNING LAW + VALUATION +
DEDUCTIBLE ITEMS
• Law governing the imposition of estate tax
• Valuation of gross estate
– Real properties
– shares of stocks
– Club shares
• Deductions from gross estate
– Claims against the estate
– Unpaid mortgages
– taxes
– casualty losses
ILLUSTRATIONS
 PLACE OF FILING & PAYMENT
• New TIN to be obtained by
executor/administrator
– from RDO where decedent was domiciled at the
time of death
• Estate tax to be paid
– before delivery of distributive share

• Payment of tax antecedent to the transfer

of ownership
• Bank withdrawals subject to 6%-within 1 yr
• Obligation of the bank to issue BIR Form 2306
– & submit quarterly report of FWT withheld
DONORS TAX LAW COMPARATIVES
AMENDMENTS INTRODUCED BY
OLD TAX CODE TRAIN LAW

0%-15% & 30% on donations 6% in excess of Php

to strangers 250,000.00

Dowries or gifts made on account

of marriage & before its
celebration or within 1 year
thereafter by parents to each of None
their legitimate, recognized
natural, or adopted children to the
extent of the 1ST Php 10,000
DONORS TAX LAW COMPARATIVES
AMENDMENTS INTRODUCED BY
OLD TAX CODE TRAIN LAW

Notice of donation by a donor

engaged in business-In order to be
exempt from donor’s tax & to claim
full deduction of donation given to
qualified-donee institution, the donor
No counterpart provisions shall give a notice of donation on
every donation worth at least Php
50,000 to the RDO within 30 days
after the receipt of qualified-donee
institution’s duly issued Certificate of
Donation
 RELATED BIR ISSUANCE ON
IMPLEMENTATION
• SAMPLES\RR NO. 12-2018 CONSOLIDATED
REGULATIONS ON ESTATE & DONORS TAX
PROVISIONS OF TRAIN LAW.pdf
 RATES & GOVERNING LAW +
FORMALITIES
• Prospective in application to start

January 1, 2018 vis-à-vis

perfection/completion of donation
• Contribution for election campaign shall be
governed by Election Code
• Instances on donation by one spouse + transfer
for less than adequate or full consideration
• BIR Notice of Donation by persons engaged in
business
ILLUSTRATION
NEW WITHHOLDING
TAX RULES UNDER
TRAIN LAW & IRR
RELATED BIR ISSUANCES ON IMPLEMENTATION OF
TRAIN LAW PROVISIONS ON WITHHOLDING TAX
• SAMPLE\REVENUE MEMORANDUM CIRCULAR
NO. 105-2017 REVISED WITHHOLDING TAX
TABLE BASED ON TRAIN LAW.pdf
• SAMPLE\OPERATIONS MEMORANDUM
ORDER 2018-01-02-6% FWT ON WITHDRAWAL
OF DEPOSITS OF DECEDENT.pdf
• SAMPLE\RMC 1-2018-PROCEDURES IN THE
WITHHOLDING TAX COMPUTATION &
REVISION OF EWT RATE.pdf
• SAMPLE\RMC 1-2018-ANNEX WITHHOLDING
TAX TABLE.pdf
• SAMPLE\DRAFT OF IMPLEMENTING RULES ON
REGULATIONS ON INCOME TAX FOR PUBLIC
CONSULTATION.pdf
• SAMPLE\RMC NO 2-2018-TRANSITIONAL
WORK-AROUND PROCEDURES ON FILING TAX
RETURNS.pdf
• SAMPLE\BIR TAX ADVISORY ON FILING OF
PERCENTAGE TAX RETURN-FEBRUARY 8,
2018.pdf
• SAMPLE\BIR TAX ADVISORY ON FURTHER
CLARIFICATIONS ON CREDITABLE & FINAL
WITHHOLDING TAX FILING-02.06.18.pdf
• SAMPLE\RR NO. 8-2018-INCOME TAX
IMPLEMENTING RULES & REGULATIONS.pdf
• SAMPLE\RMO NO. 14-2018-CREATION OF ATC
FOR EXPANDED & FINAL WITHHOLDING TAXES
UNDER TRAIN LAW.pdf

• SAMPLE\RR NO. 11-2018-

AMENDS RR 2-98 ON
WITHHOLDING TAX BROUGHT
ABOUT BY TRAIN.pdf
• SAMPLE\BIR TAX ADVISORY ON VAT TO NON
VAT UPDATE UNTIL APRIL 2.pdf
RR 11-2018 NEW WITHHOLDING TAX RULES
[JANUARY 31, 2018]
• amends RR 2-98 or the WT Regulations
• areas of amendments are as follows:
• Expanded coverage of income payments
subject to final & creditable
withholding tax & increasing the tax rates
not
• Expanded coverage on TP

required to be deducted &

withheld from their receipt of income
• Amendment on the manner, venue & time of
filing of withholding tax returns
& payment of taxes withheld at source
including the alphabetical list of payees

• Expanded coverage of de minimis

benefits, compensation income not
subject to WT
• Revision of BIR Forms 1902 + 1905 + 2316
• Transitory provision applicable to TP availing
exemption from withholding
 SPECIFIC
AMENDMENTS
 Expanded coverage of income payments
subject to Final & Creditable WT &
increasing the tax rates
• PCSO & lotto winnings amounting to Php
10,000 & more subject to 20%
• Interest income from Foreign Currency
Deposits subject to 15%
• Cash & property dividends subject to 10%
• Capital gains on sale of unlisted shares subject
to 15%
• FBT is increased to 35% for citizen, RA,
NRAETB & 25% for NRANETB
•PF for individual payee

– Not exceeding Php 3M-5%

– More than Php 3M- 10%
• PF for non-individual payee
– Not exceeding Php 720,000-10%
– More than Php 720,000-15%
• SAMPLE\AFFIDAVIT OF PROFESSIONAL MEDICAL
DOCTOR.doc
• SAMPLE\11-2018 ANNEX B-1 INCOME PAYEES
SWORN DECLARATION OF GROSS RECEIPTS-SELF
EMPLOYED PROFESSIONALS-SEVERAL INCOME
PAYORS.doc
• SAMPLE\11-2018 ANNEX B-2 INCOME PAYEES
SWORN DECLARATION OF GROSS RECEIPTS OF SELF
EMPLOYED PROFESSIONAL-LONE INCOME PAYOR.doc
• SAMPLE\11-2018 ANNEX A ON AFFIDAVIT-
DECLARATION THAT NO PF HAS BEEN CHARGED BY
MEDICAL PRACTITIONER.doc
• SAMPLE\ON PF\11-2018 ANNEX B-3 INCOME PAYEES
SWORN DECLARATION OF GROSS RECEIPTS-NON-
INDIVIDUALS.doc
• TP classified & duly notified by Commissioner
• In newspaper of general circulation or BIR website as
• LT
• SAMPLE\LTDO HEADING.pdf
• Top 20K Corp
• SAMPLE\TOP 20K NOTICE.pdf
• Top 5K Individuals
• identified Medium TP & those under
• SAMPLE\MEDIUM TP.pdf
• Taxpayer Account Management Program (TAMP)
• SAMPLE\TAMP LETTER.jpg
• Local purchases of goods-1%

• Local purchases of services -2%

 Expanded coverage on the subject TP not
required to be deducted & withheld from
their receipt of income
• Income earner whose source of income comes
from lone income payor &
– total income does not exceed Php 250,000
– should not be subjected to WT
– provided a Sworn Declaration shall be submitted to
the lone income payor
– before the initial payment of income or before
January 15 of each year, whichever is applicable
– Otherwise, the amount will be subject to WT
– SAMPLE\ON PF\11-2018 ANNEX B-2 INCOME PAYEES SWORN
DECLARATION OF GROSS RECEIPTS OF SELF EMPLOYED PROFESSIONAL-
LONE INCOME PAYOR.doc
• Payor shall in turn execute its own Sworn
Declaration
• stating the number of payees not subjected to
withholding tax

•together with the latter’s

declaration for submission to the BIR
• SAMPLE\ON PF\11-2018 ANNEX C INCOME
PAYOR WITHHOLDING AGENTS SWORN
DECLARATION.doc
• Failure to submit Sworn Declaration
• necessitates higher withholding tax rate to be
applied

•10% for individuals &

•15% for non-individuals

ILLUSTRATIONS
 Exempted Persons or Entities
• sale of real property by a corporation
• registered with HLURB/HUDCC
• as engaged in socialized housing
• where SP of house & lot or only lot does not
exceed the socialized housing price
• GSIS + SSS + PHIC + LWD
• JV or consortium formed for the purpose of
undertaking construction projects subject to
certain conditions imposed
• individuals earning Php 250,000
ILLUSTRATIONS
Amendment on the manner, venue & time
of filing of WT returns & payment of taxes
withheld at source including the
alphabetical list of payees

• BIR Forms 1601EQ for CWT

• 1602 for FWT on interest on bank deposits
• 1603 for FWT on fringe benefits
• 1601FQ for all other FWT
• shall be made not later than the last day of
the month ff the close of the quarter during
which the withholding was made
•Quarterly
Alphabetical List
of Payees (QAP) shall
be attached
• SAMPLE\MAP.xlsx
• BIR Monthly Remittance Return Form
• BIR Form No. 0619E
• BIR Form No. 0619F

• shall be filed every 10

th/15 th
(EFPS) of the month for the remittance of
withheld taxes

• For O remittance, the same will still be

filed
Expanded coverage of de minimis benefits,
compensation income not subject to WT
• medical cash allowance to dependents of
employees, not exceeding Php 1,500 per
employee per semester of Php 250 per month

Php 2K
• rice subsidy of or one sack of
50kg. rice per month amounting to not more
than Php 2,000
• uniform & clothing allowance not exceeding

Php 6K per annum

 other
• 13th month pay &

benefits not exceeding Php

90,000 shall be exempt
• Compensation income of SMW
including
• holiday pay
• overtime pay
• night shift differential pay &
• hazard pay
• shall be exempt
• Compensation income during the year not

exceeding Php 250K

• shall be exempt
 Revision of BIR Forms 1902 & 1905 &
Procedures on Filing
• BIR Form 1902 shall be accomplished if the E
does not have existing TIN
• SAMPLE\1902.xls
• BIR Form 1905 if the E has existing TIN &/or
• registered outside the RDO of the ER or
• if update of the ER information
• SAMPLE\1905-OLD BIR FORM &
PROCESSES.pdf
• SAMPLE\1905-NOVEMBER 2014.pdf
 ILLUSTRATIONS &
REVISITING THE BASICS
 Transitory provision applicable to TP
availing exemption from withholding
• Submission of Income Payee’s Sworn
Declaration of Gross Receipts/Sales
• SAMPLE\ON PF\11-2018 ANNEX B-2 INCOME PAYEES SWORN
DECLARATION OF GROSS RECEIPTS OF SELF EMPLOYED PROFESSIONAL-
LONE INCOME PAYOR.doc
– together with his Certificate of Registration
(COR)/BIR Form 2303
– SAMPLE\2303.pdf
• to the income payor/withholding agent
– on or before April 6, 2018
– should he avail of the exemption from withholding
• Income payor/withholding agent shall in turn
submit the same

April 30,
• on or before

2018
• Any excess on the income tax withheld

• shall be refunded to the

payee
• subject to adjustments on the part of the
payor/withholding agent
• to be reflected in the 1st Quarterly EWT

Return/BIR Form 1601EQ

• QAP
• for submission on or before April 30, 2018
• BIR Form 2307
• SAMPLE\2307.png
• shall be returned by the payee to the payor

• upon receipt of refund

• together with the corrected BIR Form
2307
• if still applicable
• Otherwise, the corrected form will be given in
the next quarter
 EXCISE TAX
AMENDMENTS INTRODUCED BY
OLD TAX CODE TRAIN LAW

 Php32.50-January 2018
Php31.20 per pack with 4% increase Php35.00-January 2019
annually Php37.50-January 2020
Php40.00-January 2022
 4% annual increase

 PhP2.50 per liter-2018

 Diesel-Php0.00 per liter PhP4.50 per liter-2019
Php6.00 per liter-2020

 Unleaded & premium gasoline-Php4.35  Php7.00 per liter-2018

per liter Php9.00 per liter-2019
Php10.00 per liter-2020

No counter provisions Mandatory marking of all fuel products

 AMENDMENTS INTRODUCED BY
OLD TAX CODE TRAIN LAW

 2% for up to Php600,000.00  4%
 Php12,000.00 + 20% in excess of  10% for over Php600,000.00-Php1
Php600,00.00 Million
 Php112,000.00 + 40% in excess over
Php1.1 Million  20% for over Php1 Million-Php4 Million
 Php512,000.00 + 60% of excess over
Php2.1 Million  50% for over Php4 Million

Cosmetic procedures for aesthetic reasons-

5%
none

 Php6.00 per liter using caloric & non-

Sweetened beverages-none caloric sweeteners
 Php12.00 per liter using high-fructose
corn syrup

 Php50.00-2018
 Php10.00. per metric ton of coal
Php100.00-2019
Php150.00-2020
 Various rates for other minerals
 100% increase in rate for other minerals
 RELATED PRONOUNCEMENTS
• SAMPLES\VETOED PROVISIONS OF THE PRESIDENT ON TRAIN
BILL.pdf
• SAMPLES\DRAFT OF IMPLEMENTING RULES ON REGULATIONS ON
EXCISE TAX ON INVASIVE COSMETIC PROCEDURES.pdf
• SAMPLES\DRAFT OF IMPLEMENTING RULES ON REGULATIONS ON
SWEETENED BEVERAGES TAX FOR PUBLIC CONSULTATION.pdf
• SAMPLES\RMC No 4-2018-TRANSITIONAL WORK AROUND
PROCEDURES FOR EFPS FILERS FOR EXCISABLE ARTICLES.pdf
• SAMPLES\RR NO. 1-2018-REVISED RATES ON MINERAL
PRODUCTS.pdf
• SAMPLES\RR NO. 3-2018-REVISED RATES ON TOBACCO
PRODUCTS.pdf
• SAMPLES\RR NO. 5-2018-ADJUSTMENTS ON EXCISE TAX RATES ON
AUTOMOBILES.pdf
• SAMPLE\eBIRFORMS PACKAGE 6.4.pdf
ON EXCISE TAX ON SWEETENED
BEVERAGE

•Non-alcoholic
beverages in liquid
• powdered or concentrate form
• sold pre-packed & sealed
• contains caloric & or non-caloric

sweeteners
PERSONS LIABLE

•Local manufacturer
•Importer
•Person in possession
of untaxed beverage
TAX RATE & BASE
• With Caloric & or Non-Caloric
Sweetener-Php 6.00 per liter
• With purely/partly High Fructose Corn
Syrup-Php 12.00 per liter
TIME OF PAYMENT

•Prior to removal from place of

production
COVERAGE
• Sweetened juice drinks
• Sweetened tea
• All carbonated beverages
• Flavored water
• Energy & sports drink
• Cereal & grain beverages
• Other powdered drinks not classified as
milk, juice, tea & coffee
• Other non-alcoholic beverages that
contain added sugar
EXCLUDED
• Sweetened beverages for export
• Beverages sweetened using
– Coconut Sap Sugar
– Steviol Glycosides
• All Milk Products
– formula, powdered, ready-to-drink, soy milk
• 100% Natural Fruit/Vegetable Juices
• Meal Replacement & Medically Indicated
Beverages
• Coffee products
ON EXCISE TAX ON COSMETIC
PROCEDURES
• COVERED
• Invasive cosmetic procedures &
• surgeries directed solely towards
• improving
• altering or

•enhancing patient’s
appearance
EXCLUDED
• Non-invasive procedures or
• procedures necessary to ameliorate a
deformity
• arising from congenital or developmental
defect
• injury from an accident/ trauma or
• disfiguring disease
• Tumor
• infection
TAX RATE & BASE
• 5% on gross receipts
• net of ET &
• VAT
PERSONS LIABLE
• Doctor
• Clinic
• Hospital
• which performed the procedure
– issued the OR
• Tax shall be passed on to

patient
VAT & PERCENTAGE TAX
UNDER
TRAIN LAW & IRR
 VAT LAW COMPARATIVES
AMENDMENTS INTRODUCED BY
OLD TAX CODE TRAIN LAW

VAT threshold-Php1,919,500.00 Taxable above Php3M

 Sale of goods & services to PEZA etc.-  Subject to 12% upon implementation of
0% enhanced VAT refund system
 VAT exempt sale of residential lot-not  Php1.5Million
more than Php 1,919,500.00  Php 2.5Million, by 2021 Php2Million
 VAT exempt sale of residential house &
lot & condominium-Php 3,199,200.00  Php15,000.00
 VAT exempt lease of residential unit-
Php 12,800.00  VAT exempt
 Association dues, membership fees &
other assessments & charges of  VAT exempt
homeowner’s association &
condominium corporation-vatable
 Transfer property pursuant to Section  VAT exempt Transfer of Sale of drugs
40 (C) (2) of the Tax Code on tax-free and medicines for diabetes, high
exchange-vatable cholesterol & hypertension-VAT exempt
 Sale of medicines-12% VAT effective January 1, 2019
 AMENDMENTS INTRODUCED BY
OLD TAX CODE TRAIN LAW

Amortization of input VAT on

Repealed by 2022
capital goods

 120-day period within which to refund

 90 days reckoned from the date of
reckoned from the complete
submission of official receipts &
submission of documents
invoices
 In case of inaction, appeal to CTA after
 BIR officer may be punished
the expiration of 120-day period

Monthly & quarterly Effective 2023 only

VAT filing quarterly VAT filing
WHERE ARE WE NOW?
• SAMPLES\VETOED PROVISIONS OF THE
PRESIDENT ON TRAIN BILL.pdf
• SAMPLES\DRAFT OF IMPLEMENTING RULES
ON REGULATIONS ON VAT FOR PUBLIC
CONSULTATION.pdf
• SAMPLE\PETRON NOTICE ON PASS-ON 12%
VAT.pdf
• SAMPLES\BIR ADVISORY ON VAT ZERO-RATING
OF SUPPLIERS OF PEZA TIEZA BOI FREEPORT
REGISTERED ENTERPRISES.pdf
• SAMPLES\PEZA MEMORANDUM CIRCULAR NO
2018-003-STATUS QUO DECLARATION ON VAT
ZERO-RATING OF LOCAL PURCHASES BY PEZA.pdf
• SAMPLE\UBER PAYS DEFICIENCY VAT AS A RESULT
OF IMPROPER ZERO-RATED REVENUE
RECOGNITION INSTEAD OF VAT
TRANSACTIONS.pdf
• SAMPLE\RMC NO 17-2018 REVISED POLICIES &
GUIDELINES ON REFUND PURSUANT TO TRAIN
LAW.pdf
• SAMPLE\RR NO. 13-2018-IRR ON VAT.pdf
• SAMPLE\BIR TAX ADVISORY ON VAT TO NON VAT
UPDATE UNTIL APRIL 2.pdf
CHANGES EFFECTED BY RR 13-2018
[MARCH 15, 2018]

• Zero-rated sale of goods

• Zero-rated sale of properties
• Zero-rated sale of services
• VAT exempt transactions & entities
• Administrative provisions on
– cancellation of VAT registration
– Filing system & compliance
– automatic appropriation
– Imposition of tax on persons exempt from VAT
– transitory provisions
 ON ZERO-RATED SALE OF GOODS
OR PROPERTIES
• Sale of Gold to BSP are no longer considered
as export sales but now VAT exempt
• sale of goods + supplies + equipment + fuel
• to persons engaged in international shipping
• or international air transport operations
• Provided these shall be used

exclusively for international

shipping or air transport operations
•Foreign currency
denominated sales is
no longer included under zero-rated sales
• Sales to persons or entities
• whose exemption under international
agreements to which PH is a signatory

•effectively subjects such

sales to zero rate
• SAMPLE\BIR VAT EXEMPTION CERTIFICATE-
EMBASSY OF TURKEY (1).pdf
• SAMPLE\BIR VAT EXEMPTION CERTIFICATE-
WORLD HEALTH ORGANIZATION.pdf
NO LONGER SUBJECT TO 0% VAT &
NOW SUBJECT TO 12% VAT
• Upon successful
&
establishment
• implementation of an enhanced VAT refund
system
• the ff export sales
• shall be subject to 12% VAT &
• no longer be subject to 0% VAT
• sale of raw materials or packaging materials
• to a non-resident buyer
• for delivery to a resident local export-oriented
enterprise
• to be used in manufacturing, processing,

packing or repacking in PH of the

said buyer's goods
• paid for in acceptable foreign currency &
accounted for in accordance with BSP
 ILLUSTRATION
• Export sales-sales to non-resident
• Direct export is the sale and actual
shipment of goods from PH to a foreign
country
• irrespective of the shipping arrangement
• Indirect export is the sale of raw materials
or packaging materials to a non-resident buyer
• for delivery to a resident local-export oriented
enterprise to be used in
• manufacturing, processing, packing or
repacking in PH of said buyers
• Requirement for zero-rating of export
sales to non-residents
• sale must be in acceptable

foreign
currency
• sale must be accounted for under the
rules of the BSP
 ILLUSTRATION
• Guimaras Company made the following export
sales during the year:
Export destination Terms Payment

Export for Hong FOB destination $ 100,000

Kong
Export for Thailand FOB destination P 450,000

Export to Japan FOB shipping ¥ 800,000

point
• Under FOB Destination
• ownership of the goods transfers to the
buyer
• from the moment goods arrived at the
buyer’s place of business
• Under FOB shipping point
• ownership to goods transfers to the
buyer
• from the moment the goods left the
compound of the seller
 VAT CONSEQUENCES
If Guimaras is a

VAT taxpayer Non-VAT taxpayer

Export for Hong Kong Zero-rated Exempt
Export for Thailand Exempt Exempt
Export to Japan Zero-rated Exempt
Note:
• export sales to HK & Japan
• are paid for in acceptable foreign currencies hence
• subject to 0% VAT.
• Under the destination principle
• VAT shall not apply to goods
• destined for consumption abroad
• term of shipment indicating the place of transfer of legal title over
the goods is
• immaterial to this effect
• sale of raw materials or packaging materials
• to an export oriented enterprise

• whose export sales exceed 70% of total

annual production
• Transactions considered export sales
• under Executive Order No. 226/Omnibus

Investments Code of 1987 + other

special laws
 ON SELECTED SALE OF SERVICE
• Sale of electricity by generation
• transmission by any entity
• including the National Grid Corporation of the
Philippines (NGCP) &
• distribution companies

• including electric cooperatives

• shall be subject to 12% VAT

 ON ZERO-RATED SALE OF
SERVICES
• Services rendered to persons engaged in
• international shipping or
• air transport operations
• including leases of property for use thereof
• Provided, that these services shall be

exclusively for
international shipping or
• air transport operations
 NO LONGER 0% BUT SUBJECT TO
12% VAT
• Upon successful
&
establishment
• implementation of an enhanced VAT refund
system
• the ff sale of service
• shall be subject to 12% VAT &
• no longer be subject to 0% VAT
• Processing
• manufacturing or repacking goods
• for other persons doing business outside PH
• which goods are

subsequently
exported
• where the services are paid for
• in acceptable foreign currency & accounted
for in accordance with BSP rules
 ILLUSTRATION
• XHI Corporation, a VAT-registered export trader
• had the following export sales during the month:
Goods exported Amount Traceable input VAT
Processed foods $ 200,000 P 25,000
Fruits and € 50,000 P 45,000
vegetables

• Both sales are subject to 0% VAT

• Whereas fruits & vegetables are VAT-exempt for
domestic consumption
• they are 0-rated for foreign consumption
• input VAT on both export shall be creditable against
output VAT or claimable through refund or tax credit
• Services performed by

subcontractors
&/or contractors
• in processing
• converting or
• manufacturing goods
• for an enterprise whose export sales

• exceed 70% of the total annual production

 ON VAT EXEMPT TRANSACTIONS
• Expansion of the coverage of

items
• importation of or

effects
• belonging to persons coming to
settle in PH
 ON SERVICES SUBJECT TO
PERCENTAGE TAX-VAT EXEMPT
• Amendment of the gross annual
sales/receipt threshold in the amount of

Php 3M
• for the sale or
• lease of goods or properties
• or performance of services of
• non-VAT-registered persons
 ON VAT EXEMPT SALE OF REAL
PROPERTIES
• Amendment of the unit SP ceiling set for

•low-cost housing
projects
• from Php 750K
• to unit SP
• within the SP per unit
• as set by HUDCC
• Amendment of the price ceiling per unit set
• for sale of real properties

socialized
• utilized for

housing
• from Php 225K to Php 450K
• Sale ofresidential lot valued at
Php 1.5M & below

• or house & lot &

• other residential dwellings
valued at Php 2.5M & below
• as adjusted in 2011
• using the 2010 Consumer Price Index
values
 PROVIDED THAT
• beginning January 1, 2021
• VAT exemption shall only apply to
– sale of real properties
– not primarily held for sale to customers or
– held for lease in the ordinary course of trade or
business
– sale of real property utilized for socialized housing
as defined by Republic Act No. 7279
– sale of house & lot, & other residential dwellings
with SP of not more than Php 2M
 PROVIDED FURTHER
• That every 3 yrs. thereafter
• the amounts stated herein

• shall be adjusted to its present

value
• using the Consumer Price Index
• as published by the Philippine Statistics
Authority (PSA)
ON VAT EXEMPT LEASE
• Amendment of the monthly rental ceiling

•per unit
• set for lease of

residential units

• from Php 12K to Php 15K

 MONTHLY RENTAL-3K BUT WILL
NOT EXCEED PHP 3M

•exempt from
VAT
3%
• but subject to
LESSOR HAS SEVERAL RESIDENTIAL UNITS
WITH 15K & WITH MORE THAN 15K
• gross receipts from rentals not exceeding Php
15K per month
• per unit

• shall be VAT exempt

• regardless of the aggregate annual gross
receipts
• It is also exempt
from the 3%
percentage tax
• gross receipts from rentals exceeding Php 15k
• per month
• per unit
• shall be subject to VAT
• if the aggregate annual gross receipts from
said units only exceeds PHP 3M
• Otherwise

• gross receipts will be subject to 3%

PTR
 WHAT IS MEANT BY
RESIDENTIAL UNIT?
• apartment unit in the case of apartments
• house in the case of residential houses
• per person in the case of
• dormitories
• boarding houses &
• bed spaces &
• per room in case of rooms for rent
 WHAT IS MEANT BY
RESIDENTIAL UNIT?
• apartments &
• houses & lots

• used for residential purposes &

• buildings or parts or units thereof
• used solely as dwelling places
– dormitories, rooms & bed spaces
– except motels, motel rooms, hotels & hotel
rooms, lodging houses, inns & pension houses
ILLUSTRATIONS
 VAT EXEMPT TRANSPORT OF
PASSENGERS
• Inclusion of transport of passengers

international
• by

carriers
• SAMPLE\UBER PAYS DEFICIENCY VAT AS A RESULT OF
IMPROPER ZERO-RATED REVENUE RECOGNITION INSTEAD OF
VAT TRANSACTIONS.pdf
OTHER VAT EXEMPT
TRANSACTIONS
• Sale

• importation or
• lease of
• passenger or
• cargo vessels &
• aircraft
– including engine, equipment & spare parts thereof
• for domestic or international transport
operations
• Subject to the requirement of MARINA
•Importation of
• fuel
• goods &
• supplies
• by persons engaged in international shipping
• or air transport operations
• Provided these will be used for
• international shipping or
• air transport operations
 banks
• Services of

•non-bank financial
intermediaries
– performing quasi-banking functions &

financial
• other non-bank

intermediaries
• Sale or
• lease of goods &
• services to

•senior citizens
&

•PWD
• Sale of drugs &
• medicines
• prescribed for

•diabetes
•high cholesterol &
•hypertension
• effective beginning January 1, 2019
• Sale or
• lease of goods or
• properties or the
• performance of services

•other than the

transaction mention
above
• where annual sales &/or receipts
• do not exceed Php 3M threshold
• Self-employed individuals &
• professionals

• who opted for the 8% tax

• shall also be exempt from 12% VAT
ILLUSTRATIONS
 EXEMPT TRANSACTIONS MAY BE
REGISTERED FOR VAT
• shall not apply to his sales of goods
• or properties
• or services
• Once the election is made
• it shall be irrevocable for a period of 3 years
• counted from the quarter when the election
was made
ILLUSTRATIONS
 ON CLAIM OF INPUT TAX ON
DEPRECIABLE GOODS
• amortization of input VAT

• shall only be allowed until December

31, 2021
• after which TP with unutilized input VAT on
capital goods purchased or imported
• shall be allowed to apply the same as
scheduled
• until fully utilized
ILLUSTRATIONS
 ON CANCELLATION OF VAT
REGISTRATION & INPUT VAT REFUND
• VAT-registered TP
• whose registration has been cancelled
• may apply for issuance of TCC for unused
input tax
– within 2 yrs from the date of cancellation
– date of cancellation being referred
– is the date of issuance of tax clearance
– after full settlement of all tax liabilities &
– mandatory audit
– 90 days to decide from date of submission of
OR/invoice otherwise BIR officer may be punished
 WHAT ABOUT THOSE WITH
PENDING CLAIMS?
• all claims for refund/tax credit certificate
• filed prior to January 1, 2018

120-day
• will be governed by

processing period
 REMEDY IN CASE OF DENIAL
• In case of full or partial denial

• TP may appeal the decision to CTA

within 30 days from receipt
 WHERE TO REFUND?
• DOF shall establish a VAT refund center
• in the BIR & in BOC
• that will handle the processing &

cash
• granting of

refunds of creditable input tax

 AUTOMATIC APPROPRIATION
• 5% of the total VAT collection of BIR & BOC
• from the immediately preceding year

automatically
• shall be

appropriated annually
• to be treated as a special account in the
general fund
• any unused fund, at the end of the year
• shall be reverted to the general fund
 QUARTERLY REPORT OF
BIR & BOC
• BIR & BOC to submit to the Congressional
Oversight Committee on the Comprehensive
Tax Reform Program (COCCTRP)

• quarterly report of all

• pending claims for
refund &
• any unused fund
 WITHHOLDING VAT ON GOVERNMENT
MONEY PAYMENTS & NON-RESIDENTS
• GOCCs shall deduct & withhold 5% final VAT
• Beg. January 1, 2021
• VAT withholding system shall shift from final
to creditable system
• payment for lease or
• use of properties or
• property rights to
• nonresident owners shall be subject to
• 12% withholding tax at the time of payment
 TAX ON PERSONS
EXEMPT FROM VAT
• Any person whose sales or receipts are
exempt
– under Section 109 (1) (BB) of the Tax Code
– from VAT payment &
– who is not a VAT-registered person

– shall pay a tax equivalent to 3% of his

gross quarterly
sales/receipts
 EXCEPTIONS TO 3% PT
• The ff shall be exempt from 3% percentage
tax:

•Cooperatives
• Self-employed individuals & professionals

• availing of the 8% tax

 TRANSITORY PROVISIONS
• Less than Php 3M
• may continue to be VAT-registered TP &

“Optional
• avail of the

Registration”
• shall not be entitled to cancel VAT
registration for the next 3 years
 VAT TP WHO OPT TO BECOME
NON-VAT AS A RESULT OF TRAIN
• submit inventory list of unused
invoices &/or receipts
• as of the date of filing of application
• for update of registration from VAT to Non-
VAT
• indicating the number of booklets & its
corresponding serial numbers
• surrender invoices &/or receipts for
cancellation
• A number of unused invoices/receipts
– as determined by TP
– with the approval of BIR
– may be allowed for use
– provided the phrase
– “Non-VAT registered as of (date of filing an
application for update of registration). Not valid
for claim of input tax.”
– shall be stamped on the face of each & every copy
thereof
– until new registered non-VAT invoices or receipts
have been received by TP
 PERCENTAGE TAX
AMENDMENTS INTRODUCED BY
OLD TAX CODE TRAIN LAW

Beginning January 1, 2019 , annual gross

Cooperatives are exempt from 3%
receipts not exceeding Php500,000.00 shall
gross receipts tax
be exempt from 3% BUT VETOED

Self-employed & professionals with gross Exempt effective January 1, 2019 if annual
receipts of Php1,919,500.00 and less- gross receipts not exceeding
subject to 3% Php500,000.00 BUT VETOED

Stock transaction tax on listed shares-

0.50 of 1%
0.60 of 1%
 RELATED PRONOUNCEMENTS
• SAMPLES\VETOED PROVISIONS OF THE
PRESIDENT ON TRAIN BILL.pdf
• SAMPLES\RMC NO 2-2018-TRANSITIONAL WORK-
AROUND PROCEDURES ON FILING TAX
RETURNS.pdf
• SAMPLES\BIR TAX ADVISORY ON FILING OF
PERCENTAGE TAX RETURN-FEBRUARY 8, 2018.pdf
• SAMPLE\RR NO. 9-2018-IRR ON STOCK
TRANSACTION TAX ON SALE OF UNLISTED
SHARES.pdf
• SAMPLE\BIR TAX ADVISORY ON VAT TO NON VAT
UPDATE UNTIL APRIL 2.pdf
DST + ADMINISTRATIVE
COMPLIANCE
 DOCUMENTARY STAMP TAX LAW
COMPARATIVES
AMENDMENTS INTRODUCED BY
OLD TAX CODE TRAIN LAW

Various transactions subject to different 100% increase in rate except DST on loans
rates & amounts from Php 1.00 to Php 1.50 per Php 200.00
& no increase in sale of real property &
insurance policies
RELATED BIR PRONOUNCEMENTS
& ISSUANCES
• SAMPLES\RR NO. 4-2018-REVISED RATES ON
DST.pdf
• SAMPLES\9-2018-NEW ALPHANUMERIC TAX
CODE.pdf
• SAMPLE\eBIRFORMS PACKAGE 6.4.pdf
COMPLIANCE REQUIREMENTS
AMENDMENTS INTRODUCED BY
OLD TAX CODE TRAIN LAW

Php600,000.00 threshold for audit

of CPA Php3 Million
 ADMINISTRATIVE PROVISIONS
AMENDMENTS INTRODUCED BY
OLD TAX CODE TRAIN LAW
PhP25.00 sale required to issue official
receipt/invoice [pre-printed, manual, loose- Php100.00
leaf, computer-generated

Electronic sales reporting-none except the Mandatory electronic receipts for LTS & TP
current Quarterly Summary List of Sales & engaged in export of goods & services &
Purchases & List of Importation, e-Sales within 5 yrs from enactment of TRAIN &
Reporting establishment of BIR system

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

Deficiency interest-20% Double the legal interest rate per annum

Penalty for failure to transmit sales data 1/10 of 1% of the annual net income for
the 2nd year preceding the current taxable
entered on Cash Register Machine/Point of
year for each day of violation or Php 10,000
Sales Machine to the BIR’s Electronic Sales whichever is higher & permanent closure if
Reporting System-administrative penalty violation exceeds 180 days
 PART II-ALL ABOUT TRAIN 2-
AS VALUE ADDED PRESENTATION

• ALL ABOUT TRAIN 2

 DOF JUSTIFICATIONS ON TAX
REFORM PROPOSALS PART 2
• DOF PRESENTATION ON JUSTIFICATION FOR
TAX REFORM PROPOSALS PART 2.pdf
WHERE ARE WE NOW
• January 15, 2018-DOF submitted draft for the
Tax Reform Package 2 with highlights on the ff:
– decreasing corporate income tax from 30% to

25%
– rationalising fiscal incentives granted by various
laws
• administration hopes to pass Package 2 within
the year with implementation starting 2019
• SAMPLES\TRAIN PACKAGE 2 BY DOF.pdf
 LEGISLATIVE DEVELOPMENT
• SAMPLES\TRAIN PACKAGE 2 BY DOF.pdf
• SAMPLES\HOUSE BILL 7214.pdf
• SAMPLES\HB 7458 CORPORATE INCOME TAX
& INCENTIVES REFORM ACT SPONSORED BY
CONGRESSMAN DAKILA CUA & SUPERSEDING
HB 7214.pdf
 ON HOUSE
BILLS 7214 &
7458
 INTENDED PURPOSE
• to complement TRAIN LAW
• with the intention of:
• Lowering the Corporate Income Tax Rate
• Reforming the Corporate Income Tax System
• Broadening the Tax Base by
• modernizing investment tax incentives
• to ensure fairness
• plug tax leakages &
• improve competitiveness in the ASEAN region
 UNDER HOUSE BILL 7458

excessive tax
• removing

exemptions & privileges

given to certain industries &
• limiting the grant of tax incentive to strategic

lagging
industries &

regions
 CONSIDERATIONS MADE
• PHhighest Corporate
Income Tax Rate in the Region
• but collection efficiency is one of the lowest
• Presence of various investment tax incentive
system

• which are not time-bound as

provided by various special laws
• yet investments are not at par with ASEAN
Region
 CONSIDERATIONS MADE
• Deficiency of the old tax code to address

• transfer pricing issues &

• anti-avoidance practices
• Very little involvement of the DOF on tax
incentives formulation & grant
• Introduction of comprehensive strategy &
holistic approach
• to create stable sources of revenue that will
benefit the whole country
ADMINISTRATIVE INSERTIONS UNDER
HB 7458
• Power of the CIR or authorized
representative to issue SDT
• Service of SDT shall be effected by RO
who is assigned to audit or anyone
authorized
• Service of LOA & assessment notices
wherever TP may be found
 ON CORPORATE
INCOME TAX RATE

25%
• Reduction with limit up to

2020
starting year

•20%-HB 7458
 ON SPECIAL PREFERENCE RATE
•Removal of
• proprietary tax for Educational Institutions &
Hospitals
• special tax rates for Resident Foreign Corp
• Offshore Banking Units
• RHQ & ROHQ
• Nonresident: Cinematographic Film Owner,
Lessor or Distributor, Owner or Lessor of
Vessels Chartered by PH Nationals, Owner or
Lessor of Aircraft, Machineries & Equipment
 ON OPTIONAL STANDARD
DEDUCTION

• Lowering from 40% 20%

to
 ON TAX-FREE EXCHANGE
• Redefining tax-free exchange transactions
• under Section 40 (C)(2) of the Tax Code &
• introduction of recapitalization &

•re-
incorporation as
• tax-free exchanges
ON POWER OF THE COMMISSIONER
TO IMPUTE THEORETICAL INCOME
• Redefining &
• expanding the
• authority of the Commissioner
• to distribute
• apportion
• allocate &

• impute income & deductions

• to disregard & counteract
• tax avoidance arrangements
 ON PROSECUTION OF CASES &
COLLECTION ENFORCEMENT

responsible
• Identification of

BIR legal officers

• to institute civil remedies
• for collection of taxes &
• prosecution of criminal cases
 ON INVOICING
COMPLIANCE
• Introduction of designated electronic channels
with BIR-accredited public certification system
• for issuance & transfer of receipts or invoices

• electronic sales
reporting for TP engaged in the
export of goods & services
• TP engaged in e-commerce TP under the
jurisdiction of LTS
 ON REGULATING
TAX INCENTIVES
• Regulating tax incentives for export activities
& strategic investments of Investment
Promotion Agency’s registered enterprises
• by defining the tax incentives available as well

• as limiting to registered activities &

projects only &
• administering entitlements & compliance
requirements by Fiscal Incentives Review
Board
 ON TAX INCENTIVES

•ITH for a period of not exceeding 3

yrs.
• Provided that after the expiration of ITH
• the ff. incentives may be applied for a period
not exceeding 5 yrs.
– Including the period of ITH availment
• Reduced CITR of 15%
• of the actual qualified CAPEX

•incurred
within 3 yrs
• shall be allowed as a deduction
• from taxable income
• TAX ALLOWANCE FOR INVESTMENT
• up to 50% of the taxable income
• Double deduction for R&D + training
expense
• Additional deduction for labour
expense
• 100% deduction on infra devt.
• Deduction for re-investment
allowance to mfg. industry
KEEP YOUR

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ME? We are learning
together! Keep in touch!
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