How will an individual top taxpayer be affected by the changes brought by the Tax Reform for Acceleration and Inclusion (TRAIN) law?
Under Section 5 of TRAIN , the first P250,000 annual income is exempt from income tax for all individuals, whether employed or self-employed. This means those who are earning P500,000 will be taxed at 25% from 32% personal income tax, in excess of 250,000, while those earning above P8 million will be taxed at 35%.
In addition, self-employed individuals and professionals earning P3 million or below in gross sales or receipts may avail of the optional 8% flat tax rate based on gross sales or receipts, net of P250,000 exemption in lieu of regular income tax and percentage tax.
With income tax collections expected to drop due to the implementation of TRAIN, t his year will be extra challenging for the Bureau of Internal Revenue (BIR). More than 80% of personal income tax collections are from the withholding taxes on the compensation of employees.
For 2018, the BIR's revenue target is P2.039 trillion.
Are there any incoming changes in our tax system aside from those changes brought by TRAIN?
Yes. Package 1B as proposed by the Department of Finance (DOF) is currently being discussed. It is very timely since the lowering of personal income tax under Package 1A must be complemented by a general tax amnesty to broaden the taxpayer base and improve voluntary compliance to offset revenue losses without having to rely on audit and investigation – which is said to be the source of corruption in the BIR.
I actually filed and paid my annual income tax return (ITR) last Friday, February 9, and I really felt the burden as my annual income tax is almost 5 times my salary when I was still working as a full-time faculty member of San Beda College – that's equivalent to the annual salaries of 5 teachers who can teach more than 500 students in a year.
But the taxes we pay will go a long way, especially if we work with the government to make sure it builds roads and bridges, provides quality public health and education, and hopefully, higher compensation for our tax collectors who are tasked to fund at least 80% of the total government budget.
The objective of the comprehensive tax reform program is to make our tax system simper, fairer, and more efficient.
BIR Commissioner Caesar Dulay has suspended again all investigations of the National Investigation Division (NID) to review and improve audit procedures, with the goal of collecting more taxes.
As a taxpayer, how can I help in building our nation?
By paying your right taxes. If we really want to push for genuine tax reform and to hit or even exceed our revenue target, we need to do our share – ask for official receipts (ORs), file and pay taxes correctly and on time. Visit www.sealofhonesty.ph to know more about the Seal of Honesty (SOH) Certification Program.
In partnership with the BIR, we continue to promote tax education and reform through our non-profit organization, CSR Philippines, in collaboration with the Tax Whiz Academy of the Asian Consulting Group (ACG).
After publishing the TRAIN handbook featuring 100 questions about the TRAIN law, our nationwide tax roadshow will go to Davao, Cebu, Boracay, Bacolod, and Palawan this February, and to Singapore in March. For inquiries, email us at firstname.lastname@example.org or call (02) 372-5727. – Rappler.com
Mon Abrea, popularly known as the Philippine Tax Whiz, is one of the 2016 Outstanding Persons of the World, a Move Awards 2016 Digital Mover, one of the 2015 The Outstanding Young Men of the Philippines (TOYM), an Asia CEO Young Leader of the Year, and founder of the Abrea Consulting Group and Center for Strategic Reforms of the Philippines (CSR Philippines). He currently serves as Adviser to the Commissioner of Internal Revenue of the Philippine government on tax administration reform in promoting inclusive growth. Follow Mon on Twitter ( @askthetaxwhiz ) or visit his Facebook page . You may also email him at email@example.com .