Tax Changes 2018: A comprehensive list

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Editor’s note: This article was first published on Jan. 21, 2018. It has been revamped to make sure the contents are up to date.

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We know you have a lot of questions regarding the tax changes for 2018 and the period hereafter. There are a lot of articles published discussing these changes; however, they are usually on different posts. You can always open several tabs at a time, but who has time for that?

So we scoured the web for as much information about changes in tax policies as we can and combined all of what we gathered in one comprehensive list. And here it is.

Before After

Reduced taxes

Personal Income Tax

5% to 32% 20% to 35% (beyond 250, 000)
With 50, 000 personal exemption, 25, 000 exemption per dependent child, and 2, 400 premium for health insurance and hospitalization No additional exemptions

13th month exemption

82, 000 90, 000

self-employed

Graduated income tax rate 8% or follow the tax table (250, 000 to 3, 000, 000); personal income tax table (beyond 3, 000, 000)

Mixed income earners

  • Income Tax computed based on the aggregate taxable compensation and net taxable business income
  • Net Taxable Income subject to graduated income tax rates of 5% to 32%, regardless whether compensation or business income
  • 3% percentage tax or VAT on business/professional income
Less than 3M:

8% of Gross Sales/Receipts and other income +  graduated income tax rates of 0% to 35% on compensation income or graduated income tax rates of 0% to 35% on total net taxable business income and taxable compensation income + 3% Percentage Tax on business income

More than 3M:

Compensation income and net taxable income from business subject to graduated income tax rates of 0% to 35% + VAT

Estate tax

5% to 32% 6%

Standard deduction

1, 000, 000 5, 000, 000

Family home

1, 000, 000 10, 000, 000

Donor’s tax

2% to 15% (if the donor and the donee are related); 30% (if not) 6%

Value-added tax

VAT threshold

1, 919, 500 3, 000, 000

For lease residential unit exemption

12, 800 15, 000

Drugs and medicines (diabetes, high cholesterol, and hypertension)

VATable VAT exempt

Charges collected by homeowners associations and condominium corporations

VATable VAT exempt

Increased tax

Passive income

Foreign currency deposit (interest)

7.5% 15%

Pre-terminated long-term deposits

5.20% 20%

PCSO winnings

Tax exempt 20% (more than 10, 000)

Sale of shares of unlisted stock (local)

5-10% 15%

Sale of shares of listed stock (local)

Half of 1% 6/10 of 10%

Excise tax

cigarettes

PhP30 PhP32 (until June 30, 2018)

PhP35 (until Dec. 31, 2019)

PhP37 (until Dec. 31, 2021)

PhP40 (until Dec. 31, 2023)

Manufactured oil

Per liter/kilo

Lubricating oil and greases

PhP4.50 PhP8.00

Processed gas

PhP0.50 PhP8.00

Waxes and petrolatum

PhP3.50 PhP8.00

Denatured alcohol for motive power

PhP0.50 PhP8.00

Naphtha, regular gasoline, and similar products

PhP4.35 PhP7.00

Unleaded premium gasoline

PhP5.35 PhP7.00

Aviation turbo jet fuel

PhP3.67 PhP4.00

Kerosene

PhP0.00 PhP3.00

Diesel fuel oil

PhP0.00 PhP2.50

LPG

PhP0.00 PhP1.00

Asphalts

PhP0.56 PhP8.00

Petroleum coke (per metric tone)

PhP2.50

Mineral products

Coal and coke

PhP10.00 PhP50.00 per M/T

Nonmetallic minerals and quarry resources

2% 4%

Copper and other metallic minerals

2% 4%

Gold and chromite

2% 4%

Indigenous petroleum

3% 6%

Automobiles

Up to PhP600, 000

2% 4%

Over PhP600, 000 up to PhP1.1M

PhP12, 000 + 20% of value in excess of PhP 600, 000 10% (Over PhP600, 000 up to PhP1M)

Over PhP1.1M up to PhP2.1 M

PhP112, 000 + 40% of value in excess of PhP1.1M 20% (Over PhP1M up to PhP 4M)

Over PhP2.1 M

PhP512, 000 + 60% of value in excess of PhP2.1M 50% (Over PhP4M)

Hybrid vehicles

50% of applicable tax rates

Electric vehicles

exempted

Documentary stamp tax

Original issue of Shares of Stock

PhP1.00 of PhP200 of the par value PhP2.00 of PhP200 of the par value

Sales, Agreements to Sell, Memoranda of Sales, Deliveries or Transfer of Due-bills, Certificates of Obligation, or Shares of Certificates of Stock

PhP0.75 per PhP200 of the par value PhP1.50 per PhP200 of the par value

Stamp Tax on Certificates of Profits or Interest in Property or Accumulations

PhP0.50 per PhP200 of the par value PhP1.00 per PhP200 of the par value

Bank Checks, Drafts, Certificates of Profits or Interest in Property or Accumulations

PhP1.50 PhP3.00

Debt Instruments

PhP1.00/PhP200.00 PhP1.50/PhP200.00

BIlls of Exchange or Drafts

PhP0.30/PhP200.00 PhP0.60/PhP200.00

Acceptance of Bills of Exchange

PhP0.30/PhP200.00 PhP0.60/PhP200.00

Foreign Bills of Exchange and Letters of Credit

PhP0.30/PhP200.00 PhP0.60/PhP200.00

Life Insurance Policies

PhP10.00-PhP100.00 PhP20.00-PhP200.00

Policies of Annuities

PhP0.50/PhP200.00 PhP1.00

Pre-need Plans

PhP0.20/PhP200.00 PhP0.30/PhP200.00

Certificates

PhP15.00 PhP30.00

Warehouse receipts

PhP15.00 PhP15.00

Jai-Alai, Horse Racing Tickets, Lotto or other authorized numbers games

PhP0.10/PhP1.00 PhP0.20/PhP1.00

Bills of Lading or Receipts

PhP1.00-PhP10.00 PhP2.00-PhP20.00

Proxies

PhP15.00 PhP30.00

Powers of Attorney

PhP5.00 PhP10.00

Lease and Other Hiring Agreements

PhP3.00 for the first PhP2, 000.00 and PhP1.00 for every PhP1, 000.00 in excess of PhP2, 000.00 PhP6.00 for the first PhP2, 000.00 and PhP2.00 for every PhP1, 000.00 in excess of PhP2, 000.00

Mortgages, Pledges, and Deeds of Trust

PhP20.00 for the first PhP5, 000.00 and PhP10.00 for every PhP5, 000.00 in excess of PhP5, 000.00 PhP6.00 for the first PhP2, 000.00 and PhP2.00 for every PhP1, 000.00 in excess of PhP2, 000.00

Deeds of Sale and Conveyances of Real Property

PhP15.00/PhP1, 000 (does not include donation) No increase but donation is subject to tax

Charter parties and similar instruments

PhP50.00-PhP150.00 PhP100.00-PhP300.00

New taxes

Sweetened beverages

Using purely caloric sweeteners and purely non-caloric sweeteners or a mix of the two

PhP6.00/liter

Using purely high fructose corn syrup or in combination with any caloric or non-caloric sweetener

PhP12.00/liter
Exempted from these are milk, 3-in-1 coffee, 100% natural fruit or vegetable juice, medically indicated beverages, and drinks that use natural sweeteners

Non-essential services

Invasive cosmetic procedures directed solely towards improving, altering, or enhancing the patient’s appearance

5%

PCSO winnings

Tax exempt 20% final withholding tax if more than PhP10, 000

Deadline changes

Filing of tax return for final and creditable withholding taxes

monthly Quarterly (last day of the month following the closing quarter)

Filing of the First Quarterly Income Tax Return for Self-employed Individuals and professionals (BIR Form 1701Q

April 15 May 15

Option for installment payment of Annual Income Tax in excess of P2,000 (2nd installment)

July 15 October 15

Forms 1601E, 1601F, 1602, 1606, 1603

Monthly filing Quarterly filing and payment on or before the last day of the month following the close of the calendar quarter

(Implementation is still pending since the BIR is yet to issue its implementing rules and regulations on the filing and payment deadlines and the new forms.)

Update as of April 10, 2018:

According to BIR, Taxpayers registered with the old forms types–1601E and 1601F–will automatically be registered with the new forms namely, 1601EQ, 0619E, 1601FQ, and 0619F.

Form 2551M

Filing and Payment (Non-eFPS)

January to December returns – 20th day after the end of each month

Filing (eFPS)

January to December returns – 21st to 25th day after the end of each month

Payment (eFPS)

January to December returns – 25th day after the end of each month

Quarterly filing and payment on or before the 25th day of the month following the close of the taxable quarter

(Implementation is still pending since the BIR is yet to issue its implementing rules and regulations on the filing and payment deadlines and the new forms.)

Update as of April 10, 2018:

According to BIR, Taxpayers registered with the old forms types 2551M/2551  will automatically be registered with the new form 2551Q.

Filing of estate tax return

6 months from death 1 year from death

Other changes

ITR number of pages

  • 4-page return for purely compensation income earner
  • 12-page return for self-employed/professionals or mixed-income earner
ITR shall not be more than 4 pages

Estate tax

funeral expenses (up to P200,000) and medical expenses (up to P500,000) standard deduction (wherein no substantiation is required) from P1,000,000 to P5,000,000

Notice of death

required no longer required

Installment payment of estate tax due

No option allowed in case available cash is insufficient to pay total estate tax due (within 2 years)

CPA certification

required if the gross estate is PhP2,000,000 required if the gross estate is PhP5,000,000

Bank deposits left by the decedent

Requires a certification from the BIR that estate tax has been paid Subject to 6% withholding tax

Application for VAT Refund

BIR should act on it within 90 days; otherwise, they will be criminally liable.

Audit by independent CPAs

Required if the gross annual sales, earnings, receipts, or output exceeded PhP150, 000 Required if the gross annual sales, earnings, receipts, or output exceeded PhP3, 000, 000

Ceiling of EWT rates

1% 15% (Starting Jan. 1, 2019)

Reduction of EWT rates

8% 10% and/or 15%*

Keeping of Books of Accounts

Simplified bookkeeping allowed

for those with quarterly

sales/receipts exceeding PhP50, 000

  • No option for simplified bookkeeping.
  • General requirement for all taxpayers to use a relevant and appropriate set of bookkeeping records.

Issuance of receipts/invoice

  • Sales valued at P25 or more
  • Receipts/invoices may either be:
  • Pre-printed and manually-filled up;
  • Loose-leaf; or
  • Computer-generated
  • Sales valued at P100 or more
  • Mandatory electronic receipts/invoices for large taxpayers and taxpayers engaged in export of goods and services, e-commerce (within 5 years from the effectivity of the Act and establishment of a BIR system)

Electronic Sales Reporting

Mandatory for taxpayers using CRM/POS and/or other sales machines Mandatory for large taxpayers and taxpayers engaged in export of goods and services (within 5 years from the effectivity of the Act and establishment of a BIR system)

Penalty interest

20% per annum Double the legal interest rate per annum

Attempt to evade or defeat tax

Fine of P30K to P100K and imprisonment of 2 to 4 years Fine of P30K to P100K and imprisonment of 2 to 4 years

Offenses on the printing of receipts/invoices

Fine of P1K to P50K and

imprisonment of 2 to 4 years

  • Fine of P500K to P10M and imprisonment of 6 to 10 years
  • Includes printing of fraudulent receipts/invoices

**a.) Professional fees, talent fees, commissions, etc. for services rendered by individuals, b.) Income distribution to beneficiaries of estates and trusts, c.) Income payment to certain brokers and agents, d.) Income payments to partners of general professional partnerships, e.) Professional fees paid to medical practitioners and f.) Commission of independent and/or exclusive sales representatives, and marketing agents of companies.

http://www.gmanetwork.com/news/money/economy/640400/bir-clarifies-deadline-of-filling-of-annual-itr-still-on-april-15/story/

https://www.rappler.com/thought-leaders/192873-train-tax-reform-law-what-does-it-change-explainer

https://www.bir.gov.ph/index.php/rulings-and-legal-matters/rulings/2018-bir-rulings.html

http://www.philstar.com/business/2018/01/09/1775894/train-changes-withholding-tax-rates-and-compliance

https://www.pinoymoneytalk.com/philippine-tax-reform-list-of-new-taxes/

http://www.grantthornton.com.ph/globalassets/tax-alerts/2018/01.10.2018/train-infographic-income-tax-01102018.pdf

http://www.grantthornton.com.ph/globalassets/tax-alerts/2018/01.22.2018/train-infographic_filing-and-compliance-01222018.pdf

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