What You Should Know about TRAIN

By February 9, 2019Economy, Thoughtpieces, TRAIN

On January 1, 2018, the Tax Reform for Acceleration and Inclusion or TRAIN was implemented in the Philippines. This tax reform program aims to improve the tax system and make it simpler, fairer, and more efficient.

As a dutiful taxpayer, it’s important to be aware of TRAIN, especially of the new regulations and processes. Here are the things you should know about the new tax reform program.

Decreased income tax

The first key change that you need to be aware of is lowered income tax. Under TRAIN, people with annual taxable income below P250,000 are exempt from paying personal income tax or PIT. This includes minimum wage workers.

Meanwhile, those who are earning P500,000 a year are now taxed at 25% of the excess over Php 500,000.This will be further brought down to 20% after five years.

This move aims to increase the take-home pay of most citizens and to encourage compliance.

Additional taxes for SSB

The SSB (Sugar-Sweetened Beverages) tax is imposed to encourage the consumption of healthier products and to raise awareness of the harms of SSB. Common examples of SSB products are carbonated beverages, sports and energy drinks, and sweetened juice drinks.

Because of TRAIN, an excise rate of P6 per liter will be taxed on drinks that contain caloric or non-caloric sweetener, while P12 per liter on drinks that have high-fructose corn syrup. 3-in-1 coffees and milk are not included in this tax.

Increased taxes for automobiles

The tax reform program simplifies the excise tax on automobiles to raise revenue in a progressive manner.

Under TRAIN, lower-priced cars will be taxed at lower rates while the expensive cars are taxed at higher rates.

Additional taxes for petroleum

Since 1997, the excise tax for petroleum products has not been adjusted.

According to the government, fuel excise will affect the rich more because they have greater oil consumption. They also stressed out that this move will address environmental and health concerns since fuel consumption is one of the leading causes of pollution.

Now, these new changes can be tricky as you might lose more than what you gain in this reform. But by developing an effective plan to manage your finances, you can make this work in your favor.

Online tools like Taxumo can help you better manage your finances and taxes. Simply provide the necessary data, and they’ll handle the rest. Learn more about their services here.

Author Evan Tan

Evan Tan is the Chief Marketing Officer of Taxumo. He is a communications professional with over a decade of local and regional professional experience. He also is a founding member of the Philippine LGBT Chamber of Commerce. Apart from his work and advocacy, he is passionate about traveling, working out, reading good books, and discovering vegan restaurants in and out of the country.

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