The Senate has ratified the bicameral conference committee report on the Tax Reform for Acceleration and Inclusion (TRAIN) bill that would raise the take-home pay of more than 7 million workers in the country.
Senate Bill 1592, sponsored by Senator Sonny Angara, was ratified with 16 affirmative votes, 4 negative votes, and zero abstention.
While both versions exempt P250,000 annual taxable income, members of the bicameral committee have agreed to adopt the provision of the Lower House that provides for a second tranche of the personal income tax reform that would further reduce income tax rates starting 2023.
“Ibinaba na po natin ang kaltas sa buwis simula next year, may mas malaking ginhawa pang naghihintay pagdating ng 2023. Ito ay para hindi na mapagiwanan ulit ng panahon ang tax rates na nagresulta sa napakataas na buwis na hindi na patas para sa mga ordinaryong manggagawa. Alinsunod din ito sa pangako ng administrasyong Duterte na hindi buwisan pa ang kumikita ng P20,000 pababa,” said Angara, chairman of the ways and means committee.
Bicam conferees have also agreed to raise the tax exemption cap of 13th month pay and other bonuses to P90,000.
For example, a call center representative earning about P30,168 a month is currently taxed at 30% or P55,490 annually. With such decrease in tax rates, his or her annual tax due will be reduced to P18,660 at 20%, resulting to approximately P36,830 in annual savings.
In 2023, his or her annual taxes will be further slashed to P13,995 at 15% income tax rate.
Moreover, the TRAIN bill provided for a simpler and easier tax filing and payment for self-employed individuals and professionals (SEPs) to encourage them to pay correct taxes.
Members of the bicam have agreed to make the 8% flat tax optional for those earning below P3 million so they can choose whether to opt for the 8% flat tax or the schedular personal income tax.
Self-employed and professionals earning below P250,000 will likewise be exempt from income tax, while those with gross sales or receipts of P500,000 and below will be exempt from 3% percentage tax.
The 8% flat tax will only be filed once a year, while VAT and percentage tax shall be filed quarterly. Currently, SEPs should file VAT and percentage tax returns every month.
Income tax returns will also be shortened and simplified to four pages from the current 12 pages.
“Bukod sa pagpapababa ng buwis, mas pinasimple din natin ang proseso ng pag-file ng tax returns para mas madali na ang pagbabayad ng tamang buwis,” the Angara said.
After the ratification of both houses of Congress, the consolidated bill will be transmitted to the Office of the President for his signature.