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Income tax-exempt Filipinos to triple to 6M under Duterte package – DOF

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Income tax-exempt Filipinos to triple to 6M under Duterte package – DOF

By: - Reporter / @bendeveraINQ
/ 04:50 PM June 08, 2017

Applicants for employment at a job fair. (INQUIRER.net FILE PHOTO)

MANILA — The number of Filipinos to be exempted from income taxes will triple to six million under the Duterte administration’s first tax reform package, according to the Department of Finance.

Based on preliminary DOF estimates, there are currently two million minimum-wage earners who were exempted from personal income taxes under the current tax structure.

In a statement on Thursday, the DOF said that as the tax-exempt threshold would be raised to an annual income of at least P250,000, an additional four million Filipinos earning such amount would no longer have to pay personal income tax by next year if Congress approved House Bill No. 5636 within 2017.

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“This means compensation earners with a monthly income of P21,000 and below will pay zero income tax once the tax reform package is enacted by the Congress and becomes a law,” the DOF said.

According to the DOF, the six million Filipinos to be exempted from personal income tax under HB 5636 accounted for 83 percent of the base covering individual taxpayers.

HB 5636 contained the Department of Finance’s proposal to ease the tax burden on personal income earners while slapping new or additional taxes on consumption.

Last week, the House of Representatives passed HB 5636 on third and final reading, with 246 votes for, nine against and one abstention, ahead of Congress’ sine die adjournment.

If approved by Congress and implemented next year, the government will lose P141.4 billion from lower personal income taxes on top of foregone revenues of P3.1 billion from the reduction in estate and donor’s taxes.

On the other hand, the expansion of the value-added tax base under HB 5636 will generate P81 billion in fresh revenues. The higher excise taxes to be slapped on oil products and vehicles, meanwhile, will add an additional P73.7 billion and P14.1 billion, respectively. The P10-per-liter excise tax on sugar-sweetened drinks will generate P47 billion.

Improved tax administration will also add P43.8 billion to government coffers. The tax administration measures included in HB 5636 were mandatory use of fuel marking, mandatory issuance of e-receipts, mandatory interconnection of large and medium firms point of sale machines and accounting system with the Bureau of Internal Revenue; as well as relaxation of bank secrecy for tax fraud cases.

Complementary measures approved by the House of Representatives such as the planned one-time estate tax amnesty will generate P6 billion next year. An increase in motor vehicle user’s charge will also bring in P12.9 billion in additional revenues.

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As a whole, the implementation of HB 5636 with the complementary measures will result in P133.8 billion in net revenues.  SFM

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TAGS: Business, comprehensive tax reform package, Duterte Administration, economy, excise taxes, Finance, fuel, gas, House Bill 5638, House of Representatives, income tax exemption, income tax reduction, legislation, minimum wage earners, oil, oil products, Philippine Congress, sugars-sweetened drinks, tax, tax collection, tax reform, value added taxes, vehicles
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