Train Law: Changes on Personal Income Tax

2020-02-24 17:17:35 |

The Comprehensive Tax Reform Program (CTRP) which is commonly known as the Tax Reform for Acceleration and Inclusion (TRAIN) is the Republic Act No. 10963 signed by the Philippine President Rodrigo Roa Duterte on 19 December 2017 and implemented on 1 January 2018.


Republic Act No. 10963 indicates changes in the tax system of the Philippines — the main objective of the act is to further the economic growth of the country, promote a more economical rate to the taxpayers, and provide better infrastructure, health, education, jobs, protection, and social services for the people under its jurisdiction.


The changes in the Philippine tax rate covers personal income tax, estate tax, donor’s tax, value added tax, documentary stamp tax, and excise tax on automobiles, petroleum products, sugar-sweetened beverages, cigarettes, mineral products, and cosmetic surgeries. While the TRAIN act decreases the personal income tax, it increases the rate for the other types of taxes.


TRAIN law was enforced to decrease the personal income tax and increase the rate for the other types of taxes. For instance, individuals whose income is not exceeding 250,000 PHP annually are exempted for personal income tax. Differently, the rate for individuals earning over 250,000 PHP annually are as follows:


  • For people who are earning over 250,000 PHP, but not over 400,000 PHP the rate is 20% of the excess over 250,000 PHP.

  • For people who are earning 400,000 PHP, but not over 800,000 PHP the rate is 30,000 PHP plus 25% of the excess of 400,000 PHP.

  • For people who are earning 800,000 PHP, but not over 2,000,000 PHP the rate is 130,000 PHP plus 30% of excess over 800,000 PHP.

  • For people who are earning 2,000,000 PHP, but not over 8,000,000 PHP the rate is 490,000 PHP plus 32% of excess over 2,000,000 PHP.

  • For people who are earning 8,000,000 PHP, the rate is 2,410,000 PHP plus 35% of excess over 8,000,000 PHP.


On the other hand, the personal income tax rate mentioned above is subject to change in 2023.


If you want to know more about the taxes in the Philippines before entering the Philippine market, you may ask us for guidance. Contact Business Asia Consulting and we will happily set up a consultation meeting with you.