Tax Reform for Acceleration and Inclusion (TRAIN)REPUBLIC ACT NO. 10963

An act amending Sections 5, 6, 24, 25, 27, 31, 32, 33, 34, 51, 52, 56, 57, 58, 74, 79, 84, 86, 90, 91, 97, 99, 100,101,106,107,108,109,110,112,114,116,127,128,129,145,148,149,151,155,171,174,175,177,178,179,180,181,182,183,186,188,189,190,191,192,193,194,195,196,197,232,236,237,249,254,264,269,and288;creating new Sections 51-A,148-A,150-A,150-B,237-A ,264-A,264-B, and 265-A; and repealing sections35,62,and 89; All under Republic Act No.8424, otherwise known as the National Internal Revenue Code of 1997, as amended and for other purposes.

Section 1. Title. This act shall be known as the Tax Reform for Acceleration and Inclusion (TRAIN)

Section 2. Declaration of Policy. It is hereby declared the policy of the State.

a. to enhance the progressivity of the tax system through the rationalization of the of the Philippine internal revenue tax system,  thereby promoting sustainable and inclusive economic growth;

b. to provide, as much as possible, an equitable relief to a greater number of taxpayers and their families in order to improve levels of disposable income and increase economic activity; and

c. to ensure that the government is able to provide for the needs of those under its jurisdiction and care through the provision of better infrastructure, health, education, jobs, and social protection for the people.

Section 3. Section 5 of the National Internal Revenue Code of 1997(NIRC), as amended, is hereby further amended to read as follows:

Section 5. Power of the Commissioner to Obtain Information, and to Summon, Examine, and Take Testimony of Persons. In ascertaining the correctness of any return, or in making a return when none has been made, or in determining the liability of any person for any internal revenue tax, or in collecting any such liability, or in evaluating tax compliance, the Commissioner is authorized:

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B. to obtain on a regular basis from any person other than the person whose internal revenue tax liability is subject to audit or investigation, or form any office or officer of the national and local governments, governmental agencies and instrumentalities, including the Bangko Sentral ng Pilipinas and government -owned or controlled corporations, any information such as but not limited to cost and volume of production, receipts or sales and gross incomes of taxpayers, and the names, addresses, and financial statements of corporations, mutual fund companies, insurance companies, regional operating headquarters of multinational companies, joint accounts, associations, joint ventures or consortia and registered partnerships and their members; Provided, That the Cooperative Development Authority shall submit to the Bureau a tax incentive report, which shall include information on the income tax, value-added tax, and other tax incentives availed of by the cooperatives registered and enjoying incentives under Republic Act No 6938, as amended. Provided further, That the information submitted by the Cooperative Development Authority to the Bureau shall be submitted to the Department of Finance and shall be included in the database created under Republic Act No. 10708, otherwise known as "The Tax Incentives Management and Transparency Act (TIMTA)

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Section 4. Section 6 of the NIRC, as amended, is hereby further amended to read as follows:

Section 6. Power of the Commissioner to Make Assessments and Prescribe Additional Requirements for Tax Administration and Enforcement.

A. Examination of Returns and Determination of Tax Due. After a return has been filed as required under the provisions of this Code, the Commissioner or his duly authorized representative may authorize the examination of any taxpayer and the assessment of the correct amount of tax, notwithstanding any law requiring the prior authorization of any government agency or instrumentality: Provided, however, That failure to file a return shall not prevent the Commissioner from authorizing the examination of any taxpayer.

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B. XXXX

C. XXXX

D. XXXX

E. Authority of the Commissioner to Prescribe Real Property Values.-The Commissioner is hereby authorized to divide the Philippines into different zones or areas and shall, upon mandatory consultation with competent appraisers both from the private and public sectors, and with prior notice to affected taxpayers, determine the fair market value of real properties located in each zone or area, subject to automatic adjustment once ever three (3) years through rules and regulations issued by the Secretary of Finance base on the current Philippine valuation standards: Provided, That no adjustment in zonal valuation shall be valid unless published in a newspaper of general circulation in the province, city or municipality concerned, or in the absence thereof, shall be posted in the provincial capitol, city or municipal hall and in two(2) other conspicuous public places therein: Provided, further, That the basis of any valuation, including the records of consultations done, shall be public records open to the injury of any taxpayer. For purposes of computing any internal revenue tax, the value of the property shall be, whichever is the higher of:

1. the fair market value as determined by the Commissioner, or
2. the fair market value as shown in the schedule of values of the Provincial and City Assessors

Section 5. Section 24 of the NIRC, as amended, is hereby further amended to read as follows:

Section 24. Income Tax Rates

A. Rates of Income Tax on Individual Citizen and Individual Resident Alien on the Philippines

1.  An income tax is hereby imposed:

a. on the taxable income defined in Section 31 of this Code, other than income subject to tax under Subsections B, C, and D of this Section, derived for each taxable year from all sources within and without the Philippines by every individual citizen of the Philippines residing therein;

b. on the taxable income defined in Section 31 of this Code, other than income subject to tax under Subsections B, C, and D of the Section, derived for each taxable year from all sources within the Philippines by an individual citizen of the Philippines who is residing outside of the Philippines including overseas contract workers referred to in Subsection C of Section 23 hereof; and

c. on the taxable income defined in Section 31 of this Code, other than income subject to tax under Subsections B, C, and D of this Section, derived for each taxable year from all sources within the Philippines by an individual alien who is a resident of the Philippines.

2. Rates of Tax on Taxable Income of Individuals - The tax shall be computed in accordance with and at the rates established in the following schedule:

a. Tax Schedule Effective January 1, 2018 until December 31, 2022

Not over 250,000.00 = 0%
Over 250,000.00 but not over 400,000.00 = 20% of the excess over 250,000.00
Over 400,000.00 but not over 800,000.00 = 30,000.00 + 30% of the excess over 400,000.00
Over 800,000.00 but not over 2,000,000.00 = 130,000.00 + 30% of the excess over 800,000.00
Over 2,000,000.00 but not over 8,000,000.00 = 490,000.00 + 32% of the excess over 2,000,000.00
Over 8,000,000.00 = 2,410,000.00 + 35% of the excess over 8,00,000.00



Tax Schedule Effective January 1, 2023 and onwards:

Not over 250,000.00 = 0%
Over 250,000.00 but not over 400,000.00 = 15% of the excess over 250,000.00
Over 400,000.00 but not over 800,000.00 = 22,500.00 + 20% of the excess over 400,000.00
Over 800,000.00 but not over 2,000,000.00 = 102,500.00 + 25% of the excess over 800,000.00
Over 2,000,000.00 but not over 8,000,000.00 = 402,500.00 + 30% of the excess over 2,000,000.00
Over 8,000,000.00 = 2,202,500.00 + 35% of the excess over 8,00,000.00

For married individuals, the husband and wife, subject to the provision of Section 51(D) hereof, shall compute separately their individual income tax based on their respective total taxable income: Provided, That if any income cannot be definitely attributed to or identified as income exclusively earned or realized by either of the spouses, the same shall be divided equally between the spouses for the purpose of determining their respective taxable income.

Provided, that minimum wage earners as defined in Section 22(HH) of this code shall be exempt from the payment of income tax on their taxable income: Provided, further, That the holiday pay, overtime pay, night shift differential pay and hazard pay received by such minimum wage earners shall likewise be exempt from income tax.

b. Rate of tax on Income of Purely Self-employed Individuals and/or Professionals

Source: Republic Act No. 10963 - Republic of the Philipppines, Congress of the Philipppines, Metro Manila, Seventeenth Congress, Second Regular Session.