More than six million or 86 percent of compensation earners with taxable income of P685 a day or P20,833 a month and below are exempted from paying the personal income tax starting this month under the Tax Reform for Acceleration and Inclusion Act.
Finance Secretary Carlos Dominguez III said the Train Law’s provisions would benefit clerks, call center agents earning P21,000 and below and public school teachers with the rank of Teacher I with a basic salary of P20,179 and up to Teacher III with basic pay of P22,149.
Train, the first package under the Duterte administration’s Comprehensive Tax Reform Program, exempts compensation earners and self-employed individuals with annual taxable income of P250,000 and below from paying the personal income tax.
The Bureau of Internal Revenue issued on Dec. 28, 2017 an updated withholding tax table reflecting the new PIT provisions.
BIR commissioner Caesar Dulay directed all internal revenue officers to ensure that starting Jan. 1, “everyone making compensation payments to their respective employees shall deduct and withhold from such compensation a tax determined in accordance with the revised withholding tax table.”
Under the Train, a clerk in a government office or an entry-level worker in the private sector with a monthly pay of about P15,000 a month will be exempted from the PIT.
This means that the worker now gets to take home the PIT of P18,457 that he or she used to pay annually under the old tax law and translates into a pay raise of P1,538 per month.
A call center agent earning P21,000 a month with two dependents, will also get to take home the P22,590 he or she used to pay in taxes or an effective increase in pay of P1,882 a month.
Dominguez said 99 percent of the country’s individual taxpayers would benefit from Train due to the hefty cuts in the PIT rates.
Those with a taxable annual income of P250,000, on average, would be able to take home an extra income equivalent to a substantial one-month’s pay per year.
Those with taxable income of more than P250,00 but not above P2 million would pay between 20 and 30 percent PIT. A doctor working at government hospital with two dependents and earns P73,299 a month, will take home around P58,484 more per year starting 2018 because of the adjustments in the PIT brackets and rates.
Those earning P2 million annually but not above P8 million are taxed 32 percent. The 35 percent tax are reserved for those earning P8 million taxable income and above.