THE Tax Reform for Acceleration and Inclusion (TRAIN) package will spare 99 percent of the population from paying income taxes by exempting those earning not more than P250,000 per annum from the tax.
Presidential Spokesperson Harry Roque, Jr. made the statement on Tuesday, December 19, with the enactment of Republic Act No. 10963, or the TRAIN Act.
Under the law, a minimum wage earner with P12,000 monthly salary or a clerk receiving a P15,000 salary per month will now be tax-exempt. Even a call center agent, who earns P21,000 monthly but used to file a P22,000 annual income tax return, will also be exempted.
On the other hand, a public hospital doctor with P57,000 monthly salary who used to pay P138,000 in taxes will be able to save P48,000 from taxes.
For the small- and micro-entrepreneurs, a simplified tax rate of 8 percent on gross sales will be implemented in lieu of income and percentage taxes.
Meanwhile, estate tax, or the tax paid by a deceased person’s estate, is now lowered from up to 20 percent to a fixed rate of 6 percent for the net estate with the standard deduction of P5 million.
Donors’ tax, or a tax on a donation or gift, is also lowered from up to 15 percent to a 6 percent fixed rate of net donations above P250,000 yearly.
With regard to the value-added tax (VAT), there were 54 special laws repealed with non-essential VAT exemptions.
Roque, however, confirmed that medicine for diabetes, high cholesterol, and hypertension are spared from the VAT, and purchases of senior citizens and persons with disability continue to be VAT-exempt.
In addition, TRAIN will allocate funds for cash transfer to the poorest of the poor to cushion the impact of indirect taxes on them.
“There is cash transfer provided in the law itself. Ten million households will receive cash transfer of P200 per month in 2018 and P300 per month in 2019 and 2020,” Roque said. p: wjg