[1] Republic Act No. 10963, entitled “Tax Reform for Acceleration and Inclusion (TRAIN),” Amending Sections 5, 6, 24, 25, 27, 31-34, 51, 52, 56-58, 74, 79, 84, 86, 90, 91, 97, 99-101, 106-110, 112, 114, 116, 127-129, 145, 148-151, 155, 171, 174, 175, 177-183, 186, 188-197, 232, 236, 237, 249, 254, 264, 269 and 288; creating new Sections 51-A, 148-A, 150-A, 150-B, 237-A, 264-A, 264-B, and 265-A; and repealing Sections 35, 62 and 89; all under Republic Act No. 8424, otherwise known as the National Internal Revenue Code of 1997, as amended” was approved on December 19, 2017.
Republic Act No. 10963 – An Act Amending Sections 5, 6, 24, 25, 27, 31, 32, 33, 34, 51, 52, 56, 57, 58, 74, 79, 84, 86, 90, 91, 97, 99, 100, 101, 106, 107, 108, 109, 110, 112, 114, 116, 127, 128, 129, 145, 148, 149, 151, 155, 171, 174, 175, 177, 178, 179, 180, 181, 182, 183, 186, 188, 189, 190, 191, 192, 193, 194, 195, 196, 197, 232, 236, 237, 249, 254, 264, 269, and 288; Creating New Sections 51-A, 148-A, 150-A, 150-B, 237-A, 264-A, 264-B, and 265-A; and Repealing Sections 35, 62, and 89; All Under Republic Act No. 8424, Otherwise Known as the National Internal Revenue Code of 1997, as Amended, and for Other Purposes.
Republic Act No. 11256 – An Act to Strengthen the Country’s Gross International Reserves, Amending for the Purpose Sections 32 and 151 of the National Internal Revenue Code,9 mandates the exemption from payment of income and excise taxes on the sale of gold to the BSP by registered small scale and accredited small scale miners and traders.
Republic Act No. 11346 – An Act Increasing the Excise Tax on Tobacco Products, Imposing Excise Tax on Heated Tobacco Products and Vapor Products, Increasing the Penalties for Violations of Provisions on Articles Subject to Excise Tax, and Earmarking a Portion of the Total Excise Tax Collection from Sugar-Sweetened Beverages, Alcohol, Tobacco, Heated Tobacco and Vapor Products for Universal Health Care, Amending for this Purpose Sections 144, 145, 146, 147, 152, 164, 260, 262, 263, 265, 288, and 289, Repealing Section 288(B) and 288(C), and Creating New Sections 263-A, 265-B, and 288-A of the National Internal Revenue Code of 1997, as Amended by Republic Act No. 10963, and for Other Purposes.
Republic Act111 No. 11467 – An Act Amending Sections 109, 141, 142, 143, 144, 147, 152, 263, 263-A, 265, and 288-A, and Adding a New Section 290-A to RA 8424, as amended, otherwise known as the National Internal Revenue Code of 1997, and for Other Purposes.
Republic Act No. 11534 – An Act Reforming the Corporate Income Tax and Incentives System, Amending for the Purpose Sections 20, 22, 25, 27, 28, 29, 34, 40, 57, 109, 116, 204 and 290 of the National Internal Revenue Code of 1997, as Amended and Creating Therein New Title XIII, and for Other Purposes.
[2] The National Internal Revenue Code of 1997 is embodied under Section 3 of Republic Act (RA) 8424, entitled “An Act Amending the National Internal Revenue Code, as Amended, and for Other Purposes,” which is otherwise known as the “Tax Reform Act of 1997 and which took effect on January 1, 1998. Congress passed numerous laws amending the provisions of RA 8424 such as RAs 8761, 9010, 9224, 9238, 9243, 9294, 9334, 9337, 9361, 9504, 9648, 10001, 10021, 10026, 10351, 10378, 10653, 10754, 10864, 10963 (TRAIN Law), 11256, 11346 (Tobacco Tax Law), 11467 and recently RA 11534 known as Corporate Recovery and Tax Incentives for Enterprises Act or CREATE which took effect on ______.
[3] Republic Act 1125, entitled “An Act Creating the Court of Tax Appeals,” had been amended by RA 3457, RA 9282 and RA 9503. Under RA 9282 (April 23, 2004), the jurisdiction of the Court of Tax Appeals (CTA) was expanded, elevating its rank to the level of a collegiate court. Its organizational structure was also enlarged y RA 9503 with the creation of another Division to hasten resolution of tax cases. Currently, there are three (3) divisions in the CTA.
[4] TRAIN law.
[5] Introduced by Sec. 4 of the TRAIN Law.
[6] As Amended by Republic Act (RA) No. 10021, “An Act to Allow the Exchange of Se by the Bureau of Internal Revenue (BIR) of Tax Matters Pursuant to Internationally-Agreed Tax Standards, Amending Sections 6(F), 71 and 270 of the National Internal Revenue Code (NIRC) of 1997, As Amended, and for Other Purposes”, 8 March 2010.
[7] As amended by RA No. 10351, “An Act Restructuring the Excise Tax on Alcohol and Tobacco Products by Amending Sections 141, 142, 143, 144, 145, 8, 131 And 288 of RA No. 8424. Otherwise Known as the NIRC of 1997, as Amended by RA No. 9334, and for Other Purposes”, approved on 19 December 2012.
[8] A new provision introduced by Sec. 3 of the CREATE Law.
[9] As amended by Sec. 3 of the CREATE Law
[10] Introduced by Sec. 4 of the CREATE Law, expanding the coverage of the term “corporation” to include one person corporation.
[11] As amended by RA No. 11590, “AN ACT TAXING PHILIPPINE OFFSHFORE GAMING OPERATIONS, AMENDING FOR THE PURPOSE SECTIONS 22, 25, 27, 28, 106, 108, AND ADDING NEW SECTIONS 125-A AND 288 (G) OF THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED AND FOR OTHER PURPOSES”.
[12] As amended by Sec. 5 of the TRAIN Law.
[13] Introduced by Sec. 5 of the TRAIN Law.
[14] As amended by Sec. 5 of the TRAIN Law. Previous rate was 7.5%.
[15] As amended by Sec. 5 of the TRAIN Law. Old rates were removed.
[16] As amended by Sec. 5 of the TRAIN Law. Previous rates were 5% and 10%.
[17] As amended by Sec. 5 of the CREATE Law.
[18] Introduced by Sec. 6 of the TRAIN Law.
[19] This paragraph was originally part of the amendments introduced by the TRAIN Law on Section 6(F), but was vetoed by the President. The veto message reads: “I am constrained to veto the provision under Section 6(F) of the enrolled bill that effectively maintains the special tax rate of 15% of gross income for the aforementioned employees, to wit: ‘Provided, however, That existing RHQs/ROHQs, OBUs or petroleum service contractors and subcontractors presently availing of preferential tax rates for qualified employees shall continue to be entitled to avail of the preferential tax rate for present and future qualified employees. While I understand the laudable objective of the proposal, the provision is violative of the Equal Protection Clause under Section 1, Article III of the 1987 Constitution, as well as the rule of equity and uniformity in the application of the burden of taxation: Section 1. No person shall be deprived of life, liberty, or property without due process of law, nor shall any person be denied the equal protection of the laws. In line with this, the overriding consideration is the promotion of fairness of the tax system for individuals performing similar work. Given the significant reduction in the personal income tax, the employees of these forms should follow the regular tax rates applicable to other individual taxpayers.” Under Sec. 4 (C) of Revenue Regulation (RR) 08-18, the effect of the VETO is that the 15% preferential income tax rate under subsections (C) (D) and (E) of Sec. 25 of the Tax Code, as amended, shall no longer be applicable which means that the concerned employees of the regional or area headquarters and regional operating headquarters of multinational companies, offshore banking units and petroleum service contractors and subcontractors shall be subject to the regular income tax, without prejudice, however, to the application of preferential tax rates under tax treaties, if applicable. Reading the provisions of the TRAIN Law and RR 8-2018, all employees (whether Filipino or alien) of RHQs, ROHQs, OBUs and petroleum contractors and subcontractors shall be subject to the graduated income tax rates under Sec. 24 (A)(2)(a) of the Tax Code.
[20] As amended by RA No. 11590
[21] As amended by Sec. 6 of the CREATE Law.”
[22] Deleted by Sec. 6 of the CREATE Law
[23] New provision Introduced by Sec. 6 of the CREATE Law.
[24] As amended by the CREATE Law.
[25] Sec. 6 of the CREATE Law included HDMF.
[26] Sec. 7 of the TRAIN Law excluded the Philippine Charity Sweepstakes Office and included local water districts.
[27] As amended by Sec. 7 of the TRAIN. Previous rate was 7.5%.
[28] As amended by Sec. 7 of the TRAIN. Previous rates were 5% and 10%.
[29] As amended by RA 9337.
[30] RA 10378, supra.
[31] As amended by RA 10378.
[32] The provisions on OBUs were removed/deleted by Sec. 7 of the CREATE.
[33] Introduced by Sec. 7 of the CREATE.
[34] As amended by Sec. 7 of the CREATE. The rate has increased from 7.5% to 15%.
[35] As amended by Sec. 7 of the CREATE. Previous rates were 5% and 10%.
[36] As amended by RA 11467.
[37] As amended by Sec. 7 of the CREATE. Previous rate was 35%.
[38] As amended by Sec. 7 of the CREATE. Previous rate was 20%.
[39] The entire Sec. 29 of the Tax Code, as amended, was repealed by Sec. 8 of the CREATE.
[40] As amended by Sec. 8 of the TRAIN. Personal and additional exemptions were removed.
[41] As amended by Sec. 9 of the TRAIN. Previous ceiling was P82,000. The prerogative of the Secretary of Finance to increase the ceiling was removed.
[42] Introduced by Sec. 1 of RA No. 11256.
[43] As amended by Sec. 10 of the TRAIN. Previous rate was 32%.
[44] As amended by Sec. 10 of the TRAIN. Previous divisor was 68%.
[45] As amended by Sec. 11 of the TRAIN. Subsection (M) (Premium Payments on Health and/or Hospitalization Insurance of an Individual Taxpayer) was repealed/removed.
[46] New provision introduced by Sec. 9 of the CREATE.
[47] As amended by RA 9337, supra.
[48] As amended by RA No. 11346
[49] Should read as “taxable” income, not “net” income”. Refer to Footnote of Section 31 of the NIRC of 1997, supra.
[50] Introduced by Sec. 11 of the TRAIN.
[51] Repealed by Sec. 12 of the TRAIN.
[52] As amended by Sec. 13 of the TRAIN. Personal and additional exemptions were replaced by an exemption threshold of P250,000.
[53] Under RA 9994, otherwise known as the “Senior Citizens Act of 2010,” which took effect on February 15, 2010, senior citizens who are considered to be minimum wage earners in accordance with RA 9504 shall also be treated as exempt from the payment of individual income tax.
[54] As amended by RA 9504, supra.
[55] RA 337, otherwise known as the “General Banking Act,” had been amended by RA 8791, otherwise known as the “General Banking Law of 2000.”
[56] Introduced by Sec. 13 of the TRAIN.
[57] Introduced by Sec. 14 of the TRAIN.
[58] Introduced by Sec. 15 of the TRAIN.
[59] Introduced by Sec. 3 of the TRAIN law.
[60] As amended by Sec. 16 of the TRAIN. Previous deadline was July 15.
[61] Introduced by Sec. 17 of the TRAIN.
[62] Introduced by Sec. 18 of the TRAIN.
[63] Repealed by Sec. 19 of the TRAIN.
[64] N.B.: See footnote under Section 62, supra.
[65] As inserted by RA 10021, supra.
[66] As amended by Sec. 20 of the TRAIN. Previous deadline for the first quarterly income tax declaration was April 15 of the same taxable year.
[67] As amended by Sec. 20 of the TRAIN. Previous deadline for the fourth installment was April 15 of the following calendar year. To clarify, the deadline for filing the annual income tax return and payment of the income tax payable therein is still April 15 of the succeeding calendar year pursuant to Sec 51 (C)(1) of this Code.
[68] As amended by Sec. 21 of the TRAIN. Subsections (D) (Personal Exemptions) and (F) (Husband and Wife) were removed.
[69] As amended by Sec. 22 of the TRAIN.
[70] As amended by Sec. 23 of the TRAIN. Section 86(D) (Miscellaneous Provisions) was removed.
[71] As amended by Sec. 23 of the TRAIN. Specific deductions for actual funeral expenses, judicial expenses of the testamentary of intestate proceedings and medical expenses were removed.
[72] As amended by Sec. 23 of the TRAIN. Previous threshold was P1,000,000.
[73] Introduced by Sec. 23 of the TRAIN.
[74] As amended by Sec. 23 of the TRAIN.
[75] Repealed by Sec. 24 of the TRAIN.
[76] As amended by Sec. 25 of the TRAIN.
[77] Ibid. Previous threshold was P2,000,000.
[78] As amended by Sec. 25 of the TRAIN. Previous deadline was 6 months.
[79] Introduced by Sec. 26 of the TRAIN.
[80] As amended by Sec. 27 of the TRAIN.
[81] As amended by Sec. 28 of the TRAIN.
[82] Introduced by Sec. 29 of the TRAIN.
[83] As amended by Sec. 30 of the TRAIN. Dowries or gifts made on account of marriage were removed.
[84] As amended by Sec. 31 of the TRAIN.
[85] As amended by Sec. 31 of the TRAIN. Subsection (b) (Foreign Currency Denominated Sale) was removed.
[86] As amended by Sec. 31 of the TRAIN. Sale of gold to the Bangko Sentral ng Pilipinas was removed and reclassified as exempt from value-added tax under Sec. 109 of this Code. See Note 77?>>>
[87] The amendment introduced by the TRAIN Law on Section 106(A)(2)(9)(2) was vetoed by the President. The veto message reads:
I am constrained to veto the provisions under Section 31 of the enrolled bill, to wit:
Section 31:
(2) Sale and Delivery of Goods to:
(i) Registered enterprises within a separate customs territory as provided under special laws; and
(ii) Registered enterprises within tourism enterprises zones as declared by the Tourism Infrastructure and Enterprise Zone Authority(TIEZA)
[88] Introduced by Sec. 31 of the TRAIN.
[89] As amended by RA 9334, supra and RA 10351 entitled, An Act Restructuring the Excise Tax on Alcohol and Tobacco Products by Amending Sections 141, 142, 143, 144, 145, 8, 131 and 288 of Republic Act No. 8424. Otherwise Known as the National Internal Revenue Code of 1997, as amended by Republic Act No. 9334, and for Other Purposes approved on December 19, 2012.
[90] As amended by Sec. 32 of the TRAIN.
[91] As amended by Sec. 33 of the TRAIN.
[92] Introduced by Sec. 33 of the TRAIN.
[93] The amendment introduced by the TRAIN Law was vetoed by the President. The veto message reads:
I am constrained to veto the provisions under Section 33 of the enrolled bill, to wit:
Section 33:
(8) Services Rendered To:
I. Registered Enterprises Within A Separate Customs Territory As Provided Under Special Laws; and
II. Registered Enterprises Within Tourism Enterprise Zones As Declared By the TIEZA Subject To the Provisions Under Republic Act No. 9593 Or The Tourism Act of 2009.
The above provisions go against the principle of limiting the VAT zero-rating to direct exporters. The proliferation of separate customs territories, which include buildings, creates significant leakages in our tax system. This makes the tax system highly inequitable and significantly reduces the revenues that could be better used for the poor. As to tourism enterprises, the current law only allows for duty and tax free importation of capital equipment, transportation equipment and other goods. The TIEZA Law explicitly allows only duty and tax free importation of capital equipment, transportation equipment and other goods (in certain cases and always subject to rules provided by the DOF). Thus, this provision actually grants a new incentive to suppliers of registered tourism enterprises. At any rate, TIEZA law, which is still in effect for two more years, can be used to avail of the above-mentioned incentives.
[94] As amended by RA 9337.
[95] Introduced by Sec. 34 of the TRAIN.
[96] As amended Sec. 34 of the TRAIN. Previous period was ‘within ninety (90) days before or after arrival’.
[97] As amended by Sec. 34 of the TRAIN.
[98] As amended Sec. 34 of the TRAIN. National Statistics Office (NSO) was changed to Philippine Statistics Authority (PSA).
[99] The amendment introduced by RA11534 or the CREATE Law was vetoed by the President. Hence, the original provision remains. The President, in his veto message, states that –
I am constrained to veto item (P) of the amended Section 109 of the National Internal Revenue Code of 1997, as amended (Tax Code), under Section 12 of this Act, to wit:
“(P) Sale of real properties not primarily held for sale to customers or held for lease in the ordinary course of trade or business or real property utilized for low-cost and socialized housing as defined by Republic Act No. 7279, otherwise known as the ‘Urban Development and Housing Act of 1992’, and other related laws, residential lot valued at Two million five hundred thousand Pesos (P2,500,OOO.OO) and below, house and lot, and other residential dwellings valued at Four million two hundred thousand Pesos (P4,200,OOO.OO) and below: Provided, That beginning January 1, 2024 and every three (3) years thereafter, the amounts herein stated shall be adjusted to present values using the Consumer Price Index, as published by the Philippine Statistics Authority (PSA)”;
Under the Tax Code, as amended by the TRAIN Law, the sales of house and lot and other residential dwellings valued at not more than P2.5 million shall be VAT exempt. The exemption is targeted to provide relief to buyers of socialized housing and base-level economic housing. The amendment in the CREATE Act increases the VAT-threshold to up to P4.2 million. In effect, this will benefit even those not originally targeted for the VAT-exemption—those who can actually afford proper housing. This results in a tax exemption that is highly distortive and exacts a heavy price on the taxpaying community. The provision is also prone to abuse, as properties can be parceled into lots so that their individual values fall within the VAT-exempt threshold.
If not vetoed, the estimated revenue loss from the foregoing is PI 55.3 billion from 2020 to 2030, which could be used in public goods to benefit the poor directly.
[100] Ibid. Previous threshold was P10,000.
[101] Ibid. Previous, this was subject to the 0% value-added tax under Sec. 106 (A)(2) of the Tax Code. See Note ??>>
[102] As amended by Sec. 12 of the CREATE by inserting ‘of’ after the word ‘sale”. The original provision introduced by Sec. 34 of the TRAIN states:
(AA) Sale of drugs and medicines prescribed for diabetes, high cholesterol, and hypertension beginning January 1, 2019; and
This was amended by Sec. 1 of RA 11467 which states:
(AA) Sale or importation of prescription drugs and medicines for:
[103] Introduced by Sec. 1 of RA 11467.
[104] As amended by Sec. 12 of the CREATE by changing the year 2023 (as introduced by Sec. 1 of RA 11467) to year 2021.
[105] Originally introduced by Sec. 1 of RA 11467.
[106] Introduced by Sec. 12 of the CREATE.
[107] As amended by Sec. 34 of the TRAIN. The VAT-exempt threshold was increased from P1,500,000 to P3,000,000. Original subsection (BB) of Sec. 109, is now subsection (CC) under the CREATE.
[108] Introduced by Sec. 35 of the TRAIN.
[109] As amended Sec. 36 of the TRAIN. Previous number of days was 120 days.
[110] As amended Sec. 36 of the TRAIN. Previous submission referred to ‘complete documents’.
[111] Introduced by Sec. 36 of the TRAIN.
[112] As newly introduced under RA 9337, supra.
[113] Introduced by Sec. 37 of the TRAIN.
[114] As amended by Sec. 37 of the TRAIN.
[115] As amended by Republic Act (R.A.) No. 11976, otherwise known as the “Ease of Paying Taxes Law.” (EOPT Law).
[116] As amended by Sec. 13 of the CREATE.
[117] The amendment introduced by the TRAIN Law was vetoed by the President. The veto message reads:
C. Exemptions from percentage tax of gross sales/receipts not exceeding five hundred thousand pesos (P500,000) I am constrained to veto the provision which provides for the above under line 12 of Sec. 38 in the enrolled bill, to wit:
“And Beginning January 1, 2019, Self-Employed and Professionals with Total Annual Gross Sales and/or Gross Receipts Not exceeding Five Hundred Thousand Pesos (P500,000).
The Proposed exemption from percentage tax will result in unnecessary erosion of revenues and would lead to abuse and leakages. The subject taxpayers under this provision are already exempted from the VAT, thus, the lower three percent percentage tax on gross sales or gross receipts is considered as their fair share in contributing to the revenue base of the country.
[118] Introduced by Sec. 13 of the CREATE.
[119] As amended by RA 9337, supra.
The provision “PROVIDED, THAT MICRO TAXPAYERS SHALL NOT BE REQUIRED TO WITHHOLD TAXES UNDER SUBSECTION (B) OF THIS SECTION” was vetoed by Pres. Ferdinand R. Marcos, Jr.
[120] As Amended by RA 10378, supra.
[121] As originally amended by RA 9238, supra, and as last amended by RA 9337, supra.
[122] RA 9238, supra, re-imposed the gross receipts tax on other non-bank financial intermediaries which includes pawnshops beginning January 1, 2004.
[123] As amended by RA 9238 and RA 9337, supra.
[124] As amended by RA 10001, supra.
[125] As amended by Sec. 39 of the TRAIN. Previous rate was ½ of 1%.
[126] As introduced by the EOPT Law.
[127] Introduced by Sec. 41 of the TRAIN.
[128] Introduced by Sec. 2 of RA 11346. Effective 1 January 2020.
[129] As amended by Sec. 3 of RA 11346. Previous rate was 4%.
[130] Introduced by Sec. 3 of RA 11346. Effective 1 January 2020.
[131] As amended by Sec. 3 of RA 11346. The rates under Sec. 42 of the TRAIN were increased. Effective 1 January 2020.
[132] As amended by Sec. 3 of RA 11346. Previous rate was 4%. Effective 1 January 2020.
[133] As amended by Sec. 42 of the TRAIN.
[134] As amended by Sec. 3 of RA 11346. Effective 1 January 2020.
[135] As amended by Sec. 3 of RA 11346. The rates were increased under Sec. 42 of the TRAIN. Effective 1 January 2020.
[136] Introduced by Sec. 3 of RA 11346. Effective 1 January 2020.
[137] Introduced by Sec. 4 of RA 11346. Effective 1 January 2020.
[138] Introduced by Sec. 5 of RA 11346. Effective 1 January 2020.
[139] As amended by Sec. 43 of the TRAIN. Previous rate was P4.50.
[140] As amended by Sec. 43 of the TRAIN. Previous rate was P0.50.
[141] As amended by Sec. 43 of the TRAIN. Previous rate was P3.50.
[142] Introduced by Sec. 43 of the TRAIN.
[143] As amended by Sec. 43 of the TRAIN. Previous rate was P4.35.
[144] As amended by Sec. 43 of the TRAIN. Previous, Secretary of Energy.
[145] As amended by Sec. 43 of the TRAIN. Excise tax on leaded premium gasoline was removed. Previous rate on unleaded premium gasoline was P4.35.
[146] As amended by Sec. 43 of the TRAIN. Previous rate was P3.67.
[147] As amended by Sec. 43 of the TRAIN. Previous rate was P0.
[148] As amended by Sec. 43 of the TRAIN. Previous rate was P0.56.
[149] As amended by Sec. 43 of the TRAIN
[150] The amendment introduced by the TRAIN Law was vetoed by the President. The veto message reads:
I am constrained to veto the provision which provides for the above under line 25 Sec. 43 of the enrolled bill, to wit:
“Petroleum Products, Including Naphtha, LPG, Petroleum, Coke, Refinery Fuel And Other Products Of Distillation, When Used As Input, Feedstock Or As Raw Material In The Manufacturing Of Petrochemical Products, Or In The Refining Of Petroleum Products, Or As Replacement Fuel for Natural-Gas-Fired-Combined Cycle Power Plant [,] In Lieu Of Locally-Extracted Natural Gas During The Non-Availability Thereof, Subject To The Rules And Regulations To Be Promulgated By The Secretary Of Finance, xxx, For The Purpose Of Further Processing Or Blending into Finished Products Which Are Subject To Excise tax Under This Section.”
The provision runs the risk of being too general, covering all types of petroleum products, which may be subject to abuse by taxpayers, and thus lead to massive revenue erosion. At any rate, the tax code already identifies which petroleum products can be exempted.
[151] Introduced by Sec. 44 of the TRAIN.
[152] As amended by Sec. 45 of the TRAIN.
[153] Introduced by Sec. 45 of the TRAIN.
[154] As amended by Sec. 45 of the TRAIN. Previously, pick-up trucks were not considered ‘trucks’.
[155] Introduced by Sec. 46 of the TRAIN.
[156] Introduced by Sec. 47 of the TRAIN.
[157] Introduced by Sec. 48 of the TRAIN.
[158] As amended by Sec. 48 of the TRAIN. Previous rate was P10.
[159] As amended by Sec. 48 of the TRAIN. Previous rate was P50.
[160] As amended by Sec. 48 of the TRAIN. Previous rate was P100.
[161] As amended by Sec. 48 of the TRAIN. Previous rate was 2%.
[162] As amended by Sec. 48 of the TRAIN. Previous rate was 3%.
[163] Introduced by Sec. 2 of RA 11256.
[164] Introduced by Sec. 6 of RA 11346. Effective 1 January 2020.
[165] Introduced by Sec. 49 of the TRAIN.
[166] Introduced by Sec. 7 of RA 11346. Effective 1 January 2020.
[167] As amended by Sec. 7 of RA 11346. Effective 1 January 2020.
[168] Introduced by Sec. 50 of the TRAIN.
[169] The TRAIN Law increased the rate of DST imposed on documents beginning January 1, 2018 by 100%, except DST on sale or conveyance of real property, insurance and fidelity bonds which were retained at the old rate. DST on debt instruments under Section 179 was increased by 50% only.
[170] As amended by Sec. 51 of the TRAIN. Previous rate was P1.
[171] As amended by Sec. 52 of the TRAIN. Previous rate was P0.75.
[172] As amended by Sec. 52 of the TRAIN. Previous rate was 25%.
[173] As amended by Sec. 53 of the TRAIN. Previous rate was P0.50.
[174] As amended by Sec. 54 of the TRAIN. Previous rate was P1.50.
[175] As amended by Sec. 55 of the TRAIN. Previous rate was P1.
[176] As amended by Sec. 56 of the TRAIN. Previous rate was P0.30.
[177] As amended by Sec. 57 of the TRAIN. Previous rate was P0.30.
[178] As amended by Sec. 58 of the TRAIN. Previous rate was P0.30.
[179] As amended by Sec. 59 of the TRAIN. Previous rate was P0.50 on each P200, or fractional part thereof.
[180] As amended by Sec. 60 of the TRAIN. Previous rate was P0.50.
[181] As amended by Sec. 60 of the TRAIN. Previous rate was P0.20.
[182] As amended by Sec. 61 of the TRAIN. Previous rate was P15.
[183] As amended by Sec. 62 of the TRAIN. Previous rate was P15.
[184] As amended by Sec. 63 of the TRAIN. Previous rate was P0.10.
[185] As amended by Sec. 64 of the TRAIN. The phrase “to another port or place in the Philippines” was removed.
[186] As amended by Sec. 64 of the TRAIN. Previous rate was P1.
[187] As amended by Sec. 64 of the TRAIN. Previous rate was P10.
[188] As amended by Sec. 65 of the TRAIN. Previous rate was P15.
[189] As amended by Sec. 66 of the TRAIN. Previous rate was P5.
[190] As amended by Sec. 67 of the TRAIN. Previous rate was P3.
[191] As amended by Sec. 67 of the TRAIN. Previous rate was P1.
[192] As amended by Sec. 68 of the TRAIN. Previous rate was P20.
[193] As amended by Sec. 68 of the TRAIN. Previous rate was P10.
[194] Introduced by Sec. 69 of the TRAIN.
[195] As amended by Sec. 70 of the TRAIN. Previous rate was P500.
[196] As amended by Sec. 70 of the TRAIN. Previous rate was P50.
[197] As amended by Sec. 70 of the TRAIN. Previous rate was P1,000.
[198] As amended by Sec. 70 of the TRAIN. Previous rate was P100
[199] As amended by Sec. 70 of the TRAIN. Previous rate was P1,500.
[200] As amended by Sec. 70 of the TRAIN. Previous rate was P150.
[201] The amendment introduced by the CREATE Law was vetoed by the President. The veto message on the proposed 90-day period for the processing of general tax refunds reads:
For being administratively impracticable, I am constrained to veto the whole of Section 14 of this Act, to wit:
SEC. 14. Section 204 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:
SEC. 204. Authority of the Commissioner to Compromise, Abate, and Refund or Credit Taxes. —The Commissioner may —
“(A) x xx
“(B) x xx
“(C) Credit or refund taxes erroneously or illegally received or penalties imposed without authority, refund the value of internal revenue stamps when they are returned in good condition by the purchaser, and in his discretion, redeem or change unused stamps that have been rendered unfit for use and refund their value upon proof of destruction. No credit or refund of taxes or penalties shall be allowed unless the taxpayer files in writing with the Commissioner a claim or refund within two (2) years after the payment of the tax or penalty: Provided, however, That a return filed showing an overpayment shall be considered as a written claim for credit or refund: Provided, further, That in proper cases, the Commissioner shall grant a refund for taxes or penalties within ninety (90) days from the date of complete submission of the documents in support of the application filed: Provided, furthermore, That should the Commissioner find that the grant of refund is not proper, the Commissioner must state in writing the legal and factual basis for the denial: Provided, finally, That in case of full or partial denial of the claim for tax refund, the taxpayer affected may, within thirty (30) days from the receipt of the decision denying the claim, appeal the decision with the Court of Tax Appeals.”
While I laud the intention to improve tax administration, this provision is administratively difficult for the Bureau of Internal Revenue (BIR) to implement and may cause delayed or erroneous processing of refund claims. The general form of tax refund under Section 204 of the Tax Code, as distinguished from VAT refunds in Section 112 of the same Code, requires a full audit of all internal revenue tax liabilities and examination of the tax payments, books, and returns filed by a taxpayer. Aside from this, the Tax Code itself requires the Commission on Audit to examine refunds. Thus, it is incumbent upon the BIR to exercise utmost diligence in granting a general tax refund. This is not possible within a 90-day period for all cases. I do not want the BIR to be forced to choose between only two (2) awful choices: grant tax refunds haphazardly, or deny an application outright considering the short period given to the BIR to process the same and then have the taxpayer go to court with his refund being unnecessarily delayed. Thus, while imposing a hard deadline may appear good on paper, the actual experience in the conduct of a full audit in general tax refund will either cause damage to the government if the BIR acts haphazardly, or cause more delays to the prejudice of the taxpayers if the BIR chooses the more convenient option of simply denying applications given the time constraints. As alternative, I suggest that the legislature, the Department of Finance, and the BIR, come up with mechanisms to streamline the process of tax refunds in a separate tax administration bill.
[202] Introduced by Sec. 71 of the TRAIN.
[203] As amended by Sec. 71 of the TRAIN. Previously ‘quarterly”.
[204] As amended by Sec. 71 of the TRAIN. Previous threshold was P150,000.
[205] Introduced by Sec. 72 of the TRAIN.
[206] As amended by Sec. 72 of the TRAIN.
[207] As amended by Sec. 72 of the TRAIN. Previous threshold was P1,500,000.
[208] As amended by Sec. 73 of the TRAIN.
[209] Repealed by the EOPT Law.
[210] Introduced by Sec. 73 of the TRAIN.
[211] Introduced by Sec. 74 of the TRAIN.
[212] As amended by Sec. 75 of the TRAIN. Previous rate was 20% per annum.
[213] Introduced by Sec. 75 of the TRAIN.
[214] As amended by Sec. 76 of the TRAIN.
[215] As amended by Sec. 8 of RA 11346. Effective 1 January 2020.
[216] As amended by Sec. 10 of RA 11346. Effective 1 January 2020.
[217] Introduced by Sec. 11 of RA 11346. Effective 1 January 2020.
[218] As amended by Sec. 77 of the TRAIN.
[219] Introduced by Sec. 77 of the TRAIN.
[220] Introduced by Sec. 78 of the TRAIN.
[221] Introduced by Sec. 79 of the TRAIN.
[222] As amended by Sec. 12 of RA 11346. Effective 1 January 2020.
[223] Introduced by Sec. 12 of RA 11346. Effective 1 January 2020.
[224] Introduced by Sec. 80 of the TRAIN.
[225] Introduced by Sec. 13 of RA 11346. Effective 1 January 2020.
[226] Introduced by Sec. 81 of the TRAIN.
[227] Repealed by Sec. 15 of RA 11346. Effective 1 January 2020.
[228] The amendment introduced by the TRAIN Law was vetoed by the President. The veto message reads:
E. Earmarking of incremental tobacco taxes
I am constrained to veto the provision which provides for the above in lines 20 to 29 of Sec. 82 of the enrolled bill, to wit:
“Notwithstanding Any Provisions Herein to The Contrary, The Incremental Revenues from The Tobacco Taxes Under This Act Shall Be Subject to Section 3 of Republic Act No. 7171, Otherwise Known As ‘An Act to Promote the Development of The Farmer in The Virginia Tobacco Producing Provinces’, And Section 8 Of Republic Act No. 8240, Otherwise Known As ‘An Act Amending Sections 138, 140 & 142 Of The National Internal Revenue Code, As Amended, And for Other Purposes.”
The provision effectively amends the Sin Tax Law, or RA 10351, which provides for guaranteed funds for universal health care. The provision will effectively diminish the share of the health sector in the proposed allocation.
[229] Introduced by Sec. 82 of the TRAIN.
[230] Introduced by Sec. 14 of RA 11346. Effective 1 January 2020.
[231] Introduced by Sec. 16 of RA 11346. Effective 1 January 2020.
[232] As amended by Sec. 15 of the CREATE.
[233] Introduced by Sec. 15 of the CREATE.
[234] Introduced under RA No. 11534 (Corporate Recovery and Tax Incentives for Enterprises Act or CREATE Act)
[235] Vetoed under Par C. The President, in his veto message under Par. C – Definition of investment capital, states that –
I am constrained to veto item (g) of the new Section 293 of the Tax Code under Section 16 of this Act:
“(g) Investment capital refers to the value of investment indicated in Philippine currency, excluding the value of land and working capital, that shall be used to carry out a registered project or activity, except that land shall be included as investment capital for registered real estate development. Investment capital may include the cost of land improvements, buildings, leasehold improvements, machinery and equipment, and other non-current tangible assets;”
The term “investment capital” is relevant in determining which registered projects or activities shall fall within the approving jurisdiction of the Fiscal Incentives Review Board (FIRB). To ensure that currently operational administrative processes are not unduly disturbed, I prefer that we adopt the measures now used by investment promotion agencies to determine the scale of an investment. Excluding land and operating expenses from the measure of an investment’s total scale may also lead to an underestimation of our investment promotion performance.
[236] Vetoed under Par. D (1). The President, in his veto message under Par D – Redundant incentives for domestic enterprises, states that –
The special corporate income tax (SCIT) rate for domestic market enterprises, which is in lieu of all local and national taxes, is redundant, unnecessary, and weakens the fiscal incentives system. Domestic-oriented enterprises are market-seeking enterprises or enterprises that invest in selling goods and services to a market where viable demand exists—with or without tax incentives.
Tax incentives for domestic market enterprises are only justified to the extent that they yield measurable net benefits to the economy. I find that the generous, targeted, and performance-based enhanced deductions to domestic activities in priority sectors or industries under the CREATE Act are already sufficient incentives for the purpose.
Contrary to a common misconception that denying domestic enterprises the SCIT is tantamount to abandoning our own local businesses to fend for themselves, vetoing the subject provision is actually for the benefit of all local businesses. It must be emphasized that only registered business entities are proposed to be entitled to SCIT. Thus, local and homegrown firms that are not registered firms, which make up most of our MSMEs, will have to pay more taxes than registered firms. The latter would then have more legroom to reduce prices, secure more contracts, and ultimately take over the market and put our MSMEs out of business. In actuality, this line item veto will effectively level the domestic playing field and provide only the most generous incentives during the most critical times [e.g., income tax holiday 0TH) during start-up years]. After ITH expires, performance-based incentives, specifically the enhanced deductions, will become available. All of these ensure that extended tax savings are matched with targeted spending (e.g., direct labor and research and development) and not awarded outright which is the case if SCIT is extended to them.
[237] Vetoed under Par. D (2)
[238] Vetoed under Par. D (3)
[239] Vetoed under Par. D (4)
[240] Vetoed under Par. D (5)
[241] Vetoed under Par. D (6)
[242] Vetoed under Par E (1). The President, in his veto message under Par E – Allowing existing registered activities to apply for new incentives for the same activity, states that –
Allowing an additional fourteen (14) to seventeen (17) years of incentives and another ten (10) year-extension for the same activity on top of the original period of incentives enjoyment is fiscally irresponsible and utterly unfair to the ordinary taxpayer and to un incentivized enterprises. Registered business enterprises interested in further enjoying incentives must engage in new activities or projects incentivized in the Strategic Investment Priority Plan. My principle on this matter is simple: only new activities and projects deserve new incentives.
[243] Vetoed under Par. D (7)
[244] Vetoed under Par. D (8)
[245] Vetoed under Par. E (2)
[246] Vetoed under Par. E (3)
[247] Vetoed under Par. G (1). The President, in his veto message under Par G – Specific industries mentioned under activity tiers, states that –
On the one hand, there are industries in the enumeration that either do not merit support through incentives or are expected to become obsolete in the short-term. On the other hand, there might be economic activities in the mid- to long-term that need to be prioritized and granted tax incentives which are not captured in the current enumeration. The CREATE Act must be kept flexible to be able to keep up with the changing times. Activities and projects should not be hard coded in the law so that we do not keep on incentivizing obsolete industries and close our doors to technological advances and industries of the future.
[248] Vetoed under Par. G (2)
[249] Vetoed under Par. D (9)
[250] Vetoed under Par. D (10). The President has vetoed all mention of “/SCIT” in the table after the phrase “For domestic market activities”.
[251] Vetoed under Par. I. The President, in his veto message under Par I – Automatic approval of applications for incentive, states that –
The automatic approval of applications runs counter to the declared policy to approve or disapprove applications based on merit. The core of the reform is to develop a performance-based tax incentives system. The FIRB or the investment promotion agencies, as the case may be, should be allowed to carefully review the application for tax incentives since these are privileges granted by the State. This important function should not be sacrificed for the sake of expediency.
Moreover, concerns over inaction can be addressed by the Ease of Doing Business and Efficient Government Service Delivery Act of 2018, which punishes the failure to render government services within a prescribed time.
[252] Vetoed under Par. F. The President, in his veto message under Par F – Limitations on the power of the FIRB, states that –
The primary role of the FIRB in the fiscal incentives system of the Philippines is to exercise policy-making and oversight functions on all registered business enterprises and investment promotion agencies. Section 297 (B) is clear that the power of the investment promotion agencies to grant incentives only stems from a delegated authority from the FIRB.
Corollary to this, the current practice of granting incentives without a regular impact analysis conducted and without regard to the final cost to the government is unacceptable, given our economic aims under the CREATE Act. Consistent with the theme of the “Tax Incentives Management and Transparency Act (TIMTA)” emphasizing fiscal accountability and transparency in the grant and management of tax incentives, the oversight functions of the FIRB will ensure the proper grant and monitoring of tax incentives, as well as assure Filipinos that in every peso invested, we get our tax’s worth. These powers must remain plenary over those of the investment promotion agencies.
The concern that the FIRB oversight will result in inordinate delays is highly speculative. Even with the veto of the foregoing provision, the investment promotion agencies retain the delegated power to grant incentives up to a certain threshold amount. The FIRB does not create another layer in the approval process but is simply granted the authority to check whether the incentives granted by the investment promotion agencies conform to the overarching aim of the reform to modernize our incentive system into one that is performance-based, targeted, time-bound, and transparent. The oversight power of the FIRB supports its policy-making function since analyzing important data on all granted incentives is crucial in crafting sound, sustainable, and fiscally responsible incentives policy.
[253] Vetoed under Par. H. The President, in his veto message under Par H – Provision granting the President the power to exempt any investment promotion agency from the reform, states that –
The provisions allowing any future President the power to exempt an investment promotion agency from the coverage of the CREATE Act disregards the huge steps we have taken to rationalize our fiscal incentives system. It could become a highly political tool that could allow subsequent Presidents to dismantle decades of studies, disregard discussions based on empirical evidence, and even subvert the will of Congress itself. Fair and sensible public policy must bear the quality of uniform application. Exempting any investment promotion agency from the CREATE Act, which provides for transparency, accountability, and proper administration of tax incentives may be used as an escape from the accountability measures institutionalized in that law, and opens a wide path for discretion and capture by vested interests.
[254] As amended by the TRAIN Law and the EOPT Law.
[255] As amended by RA No. 11534 and the EOPT Law.
[256] As Amended by RA No. 10378 and the EOPT Law.
[257] As amended by the EOPT Law. Previous threshold is P100.00.
[258] Section 6(E) of the Tax Code was repealed by Section 38(C) of Republic Act (RA) No. 12001. Under Section 18 (a)(3) of RA No. 12001, the Commissioner of Internal Revenue shall use the Schedule of Market Values or the actual gross selling price in consideration, as stated in real property transaction documents, whichever is higher, in computing any internal revenue tax
[259] The authority of the Commissioner to prescribe real property values under Section 6(E) of the Tax Code was repealed by Section 38(C) of Republic Act (RA) No. 12001. Under Section 18 of RA No. 12001, the approved Schedule of Market Values shall be used as basis for the determination of real property-related taxes of national and local governments
[260] As introduced by the CREATE MORE Act (RA No. 12066).
[261] As amended by the CREATE MORE Act (RA No. 12066).
[262] As amended by RA No. 12023.
[263] As introduced by RA No. 12023.
[264] As introduced by RA No. 12079.
[265] As amended by RA No. 12214.
[266] As introduced by RA No. 12214.
[267] The deletion of this paragraph under RA No. 12214 was line-item vetoed by the President of the Philippines and was thereby retained.
