Filipinos earning Php 250k/year exempted from income taxes once Duterte tax bill is passed

Filipinos earning Php 250k/year exempted from income taxes once Duterte tax bill is passed

- in Economy, News
[Photo from Presidential Photographers Division]

The first P250,000 in taxable income of compensation earners will be exempted from the personal income tax (PIT) under the proposed Duterte Tax Reform for Acceleration and Inclusion Act (D-TRAIN). Families receiving a combined monthly income of between P13,000 and P40,000 will be able to increase their take-home pay by between P1,100 and 3,500 per month –or P14,000 to P42,000 per year –according to the Department of Finance (DOF).

“The income tax exemption for the first P250,000 that every compensation earner makes annually is the gift of President Duterte to the Filipino people,” Finance Secretary Carlos Dominguez III said. “This means that those earning around P20,000 and below per month will pay zero.”

DOF computations show that even with the slightly higher expenses that taxpayers would incur under the TRAIN’s revenue-enhancing provisions, the increases in their take home pay would more than offset these additional costs.

As an example, two call center agents earning a monthly income of P21,000 each with four kids or dependents will have tax savings of P3,984 a month, which would more than offset their additional expenses totaling P982 a month under D-TRAIN.

Dominguez said that under the new Personal Income Tax (PIT) rates as proposed in the TRAIN bill, those earning P250,000 and below will pay zero tax while the next tax brackets were adjusted to make the system more progressive. Only the ultra-rich or those earning P5 million and above pays the marginal tax rate of 35 percent.

Tax reform, Dominguez said, is an indispensable component of the President’s broad economic strategy dubbed “DuterteNomics,” which aims to sustain a high growth rate of seven percent over the medium term and bring down the poverty incidence rate to 14 percent by 2022.

The proposed TRAIN, which was passed by the House of Representatives as House Bill No. 5636, will also end the country’s complex tax system that has become vulnerable to evasion and leakages by transforming it into a “simple, just and efficient” structure, he noted.

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