5. No more tax exemption in lotto winnings and some cosmetic procedures
TRAIN law also removes the tax exemption of Lotto winnings. Beginning 2018, winnings of more than P10,000 will be subject to 20% tax.
While the first proposal was for a 20% tax increase in some cosmetic procedures that are for aesthetic purposes only, it was finalized to 5%. Exempted from this tax are surgeries and procedures for correcting dysfunctional body areas and birth defects.
6. The effect on Value Added Tax
The previous threshold of P1.9 million in Value Added Tax will now be increased to P3 million. Some exemptions from VAT then would be small businesses with total annual sale of less than P3 million, senior citizens and PWDs, renewable energy, and drugs and medicines for diabetes, hypertension, and cholesterol (starting 2019). Monthly rentals up to P15,000 is also now exempted from VAT, a welcome addition to the previous P10,000 below exemption.
This means more Filipinos can have a chance at being entrepreneurs which in turn, if the business thrives, makes way for more infrastructures and jobs.
7. Tax compliance will become more simple
A simplified tax filing and payment process is expected as workers with an annual salary of P250,000 will be exempted from tax starting this year. This means workers who fall in this bracket will now no longer have to file income tax returns (ITR). Self-employed and professionals still have to file their ITRs for record and monitoring purposes of the Bureau of Internal Revenue (BIR). In compliance also to this simplification, BIR will also cut the current 12 pages of the ITR to four pages.
8. The government promises help
The government has promised a P200-a-month conditional cash transfer to poor families to cushion the impact of the law to the poor. For the next two years this will be increased to P300 a month.
If you’re wondering where the revenue from the TRAIN law will go, 70% of it is going to the Build, Build, Build Program of the government that aims to spend more for infrastructures until the end of the president’s term in 2022. The other 30% will go to education, social protection, health, and housing among others.
We’re in for one heck of a ride financially; taxes will become even higher as the years go by. You can look at this as something that will make you want to move abroad and switch nationalities, or you can always look at the bright side: you can choose what you want to spend your increased take-home money for and you can wait for a full year to see the TRAIN law’s full impact.
Everything’s a give and take. What did you expect? We can’t have it all.
What do you think of this law? Share it with us below!