CONTINUEThis site uses cookies. By continuing to browse this site you are agreeing to our use of cookies. Find out more.
  1. Front Page
  2. News By Topic
  3. New Filipino Income Tax Reform Bill Tabled

New Filipino Income Tax Reform Bill Tabled

by Mary Swire, Tax-News.com, Hong Kong

11 November 2015


Sonny Angara, the Chairman of the Philippines' Ways and Means Committee, has tabled a new Income Tax Reform Bill, which would overhaul personal income tax thresholds, to make the regime more "equitable" and "progressive."

He pointed out that, under the National Internal Revenue Code of 1997, individuals with taxable income of over PHP500,000 (USD10,617) are subject to a fixed levy of PHP125,000 plus a 32 percent rate on the excess over PHP500,000. This 32 percent is among the highest in the region, only behind Thailand and Vietnam's 35 percent.

Angara said: "PHP500,000 in 1997 does not have the same value today due to inflation. PHP1 in 1997 when adjusted for inflation is now worth only 44 centavos. Middle-income earners, who were mostly taxed at 25 percent in 1997 are now pushed into the top tax bracket at 32 percent, together with the billionaires of our country because of our outdated tax system. Is this equitable and progressive? Clearly, it is not."

He added: "While our initial proposal was to lower the tax rates across the board and compress the tax brackets from seven to five, adjusting income taxes to take into account inflation is a more viable proposal for the remaining time of the present administration. This is the minimum position our Government can take in reforming our outdated and unjust tax system."

Under Senate Bill 3003, the seven tax brackets will be retained but the thresholds would be adjusted as follows:

  • Those earning not over PHP23,000 would pay a fixed tax rate of five percent;
  • Those earning over PHP23,000 but not over PHP68,000 would pay a fixed tax of PHP1,100 plus ten percent of the excess over PHP23,000;
  • Those earning over PHP68,000 but not over PHP160,000 would pay a fixed tax of PHP5,600 plus 15 percent of the excess over PHP68,000;
  • Those earning over PHP160,000 but not over PHP320,000 would pay an excess tax of PHP19,400 plus 20 percent of the excess over PHP160,000;
  • Those earning over PHP320,000 but not over PHP570,000 would pay a fixed tax of PHP51,400 plus 25 percent of the excess over PHP320,000;
  • Those earning over PHP570,000 but not over PHP1.2m would pay a fixed tax of PHP114,000 plus 30 percent of the excess over PHP570,000; and finally
  • Those earning over PHP1.2m would pay a fixed tax of PHP300,000 plus 32 percent of the excess over PHP1.2m.

To avoid bracket creep in the future, income tax thresholds would be adjusted automatically, in line with the consumer price index, every three years.

TAGS: individuals | compliance | tax | tax compliance | revenue guidance | law | Philippines | Thailand | enforcement | ministry of finance | tax planning | tax rates | tax reform | regulation | trade | inflation | individual income tax | Vietnam | Tax

To see today's news, click here.

 















Tax-News Reviews

Cyprus Review

A review and forecast of Cyprus's international business, legal and investment climate.

Visit Cyprus Review »

Malta Review

A review and forecast of Malta's international business, legal and investment climate.

Visit Malta Review »

Jersey Review

A review and forecast of Jersey's international business, legal and investment climate.

Visit Jersey Review »

Budget Review

A review of the latest budget news and government financial statements from around the world.

Visit Budget Review »



Stay Updated

Please enter your email address to join the Tax-News.com mailing list. View previous newsletters.

By subscribing to our newsletter service, you agree to our Terms and Conditions and Privacy Policy.


To manage your mailing list preferences, please click here »