House passes Duterte tax reform bill on final reading

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Rodrigo Duterte. File photo

MANILA – The House of Representatives on Wednesday passed on third and final reading President Rodrigo Duterte’s tax reform bill, in a boost to his efforts to rebuild the country’s infrastructure.

The measure seeks new duties on petroleum products and sweetened beverages to offset a reduction in personal income taxes that Duterte promised during last year’s campaign.

The Senate will need to pass counterpart legislation and reconcile it with the House bill before Duterte can sign it into law.

The measure is expected to generate P82 billion in annual revenues, half the projected P162 billion in the original proposal from the Department of Finance.

Duterte, who certified the bill as urgent, has set an ambitious P8-trillion plan to build new roads, railways, bridges and airports.

Here are key points of House Bill 5636 or the Tax Reform for Acceleration and Inclusion Act:

Effective January 1, 2018 to 2020, those earning no more that P250,000 annually are exempted from income tax, while the tax schedule is as follows: P250,000 to P400,000– 20 percent of the excess over P250,000; P400,000 to P800,000– P30,000 plus 25 percent of the excess over P400,000; P800,000 to P2,000,000— P130,000 plus 30 percent of the excess of P800,000; P2,000,000 to P5,000,000—P490,000 plus 32 percent of the excess of P2,000,000; Over 5,000,000– P1,450,000 plus 35 percent of the excess over P5,000,000

The tax rates will be lowered further from January 1, 2021: P250,000 to P400,000– 15 percent of the excess over P250,000; P400,000 to P800,000—P22,500 plus 20 percent of the excess over P400,000; P800,000 to P2,000,000— P102,500 plus 25 percent of the excess of P800,000; P2,000,000 to P5,000,000—P402,500 plus 30 percent of the excess of P2,000,000; Over 5,000,000– P1,302,050 plus 35 percent of the excess over P5,000,000

A P10-per-liter excise tax will be imposed on non-alcoholic sweetened beverages, in liquid, powder or concentrate forms. These include all carbonated drinks, flavored water, energy drinks, sports drinks, juices, teas, coffee, and cereal and grain-based drinks.

A first time P3-per-liter excise tax on diesel and liquefied petroleum gas and higher duties on gasoline and kerosene. 

A flat rate of 6 percent will also be imposed for estate and donor taxes.



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