Let's Get on the TRAIN
TRAIN revises the income tax rates for individuals
One of the objectives of the Tax Reform for Acceleration and Inclusion (TRAIN) bill is to adjust the income tax rates and the income brackets in order for individual taxpayers, specifically wage earners, to have higher take-home pays.
Why this matters
Once the TRAIN bill is enacted, earnings of individual taxpayers up to Php250,000.00 shall be exempt from tax. Further, annual income in excess of Php8 million would be subject to the top income tax rate of 35 percent.
Key Points to Consider
Since the TRAIN bill is intended to be effective on 01 January 2018, new withholding tax rates on compensation should be adopted by the Bureau of Internal Revenue (BIR) via revenue regulations. Historically, however, the BIR does not issue revenue regulations immediately. For instance, the revenue regualtions for Republic Act (RA) No. 9504, which provided for the tax exemption for minimum wage earners and increased the personal/additional exemptions, were released only months after the effectivity of RA No. 9504. Prior to the issuance of a revised transitional withholding tax table, current withholding tax rates were applied.
Given the foregoing, employers may have to anticipate erroneous remittances until the transitional withholding tax tables become available. They should keep sufficient documentation for the required amendments.
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