The TRAIN law or Republic Act 10963, took effect on January 1, 2018, it is the first of five tax reform packages for a simpler, fair, and efficient tax system
First, you can heave a sigh of relief because if your gross monthly salary is PHP 21,000 or less, you will no longer be taxed. An individual with an annual taxable income of PHP 250,000 is exempted from income tax payment. Around 83% of taxpayers in the Philippines will benefit from the tax exemption, as reported by the Department of Finance (DOF).
Second, it is related to the first one. It will have a Fair Tax System. According to the DOF, the new law will lessen the tax burden of the poor and the middle class, passing it on to the higher-income earners who comprise 0.1% of taxpayers in the Philippines. Those earning more than PHP 8 million annually will pay a higher maximum tax rate of 35% (previously at 32%).
Poor and Middle Class
Third, Simpler Tax Filing and Payment. Computing the estate tax and donor’s tax used to be very complicated with different rates. In the old tax code, the estate tax rates ranged from 5% to 32%, and the donor’s tax ranged from 2% to 30%. Under the new tax reform law, the estate and donor’s tax will have a single, fixed rate of 6%.