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Senate approves on third reading Duterte’s first tax reform package

By La Cámara on November 29, 2017 in NEWS
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The Senate approved its version of the Tax Reform for Acceleration and Inclusion Act (TRAIN) on Tuesday, containing the first batch of tax reforms proposed by the Duterte administration.

“With 17 affirmative votes, one negative vote, Senate Bill No. 1592 is approved on third reading,” Senate President Senator Aquilino Pimentel III said.

Those who voted yes were Senators Juan Edgardo Angara, Nancy Binay, Franklin Drilon, JV Ejercito, Francis Escudero, Sherwin Gatchalian, Richard Gordon, Gregorio Honasan, Loren Legarda, Manny Pacquiao, Grace Poe, Ralph Recto, Tito Sotto, Joel Villanueva, Cynthia Villar, Miguel Zubiri, and Pimentel.

The only objection came from Senator Risa Hontiveros, who said the measure should have lowered the valued-added tax (VAT) to 10 percent.

“If we were not in such a rush to get the TRAIN Bill passed, we would have had enough time to simmer down, compose ourselves, and see the wisdom to lower VAT rates from 12 percent to 10 percent and then subsequently align it with VAT regimes in the region,” she said.

“The Senate missed a historic opportunity to lessen the burden of our countrymen and women from this indirect and regressive form of taxation,” she added.

Senate Bill No. 1592—a consolidation of 31 other bills—was prepared by the Senate Committee on Ways and Means, led by Senator Angara.

The measure was approved on second and third reading. It was certified as urgent by President Rodrigo Duterte.

The reforms include reducing the personal income tax and expanding the value-added tax (VAT) base, as proposed by the Department of Finance (DOF).

Revenue-generating items

Under the Senate-approved version, those earning P250,000 annually are exempt from paying income tax, while those earning P250,001 to P400,000 will pay a 20- percent tax on earnings beyond P250,000.

Those earning P400,001 to P800,000 will be taxed P30,000 plus 25 percent on earnings that exceed P400,000, while those earning P800,001 to P2 million will be charged P130,000 plus 30 percent on earnings that exceed P800,000.

Meanwhile, those who earn over P2 million to P8 million will be taxed P490,000 plus 32 percent of on income exceeding P2 million, and those earning over P8 million will be charged P2.410 million plus 35 percent on earnings beyond P8 million.

The measure also provides exemptions for 13th-month pay and other bonuses up to P82,000.

The same measure, however, provided additional revenue-generating items:

  • 100 percent higher documentary stamp tax rates
  • Higher final tax on foreign currency deposits from 7.5 percent to 15 percent
  • 10-percent excise tax on cosmetic procedures and body enhancements
  • Higher coal excise tax from P10 per metric ton to P100 per metric ton
  • 100 percent higher excise tax rates of select minerals to 4 percent

The measure provides for a two-tier excise tax structure for automobiles.

The House of Representatives approved its counterpart measure in May.

The TRAIN will now proceed to the bicameral level where both Houses of Congress will deliberate on the measure before it is forwarded to Malacañang for signature of the President.

Source: gmanetwork.com

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