Zero Tax for Employees earning Php 21k monthly and below

Published April 23, 2017, 3:30 PM

Employees receiving a monthly income of P21,000 will be exempted from paying personal income tax (PIT), allowing over P20,000 in savings annually, under the first package of the comprehensive tax reform plan (CTRP).

Finance Undersecretary Karl Kendrick Chua said the revised CTRP Package One under House Bill 4774 that was filed by Rep. Dakila Carlo Cua retained the DOF-proposed exemptions on the first P82,000 in earnings from the 13th month pay and other bonuses received by taxpayers. This proposal will also increase the threshold for those who will pay zero tax under the tax reform plan.

Cua has agreed in principle to tackle the bill as a package, which puts to rest concerns that the Congress might abandon the revenue-generating measures of the proposal and only pass the revenue-eroding portion of lowering income tax rates.

“Tax rates for 99 percent of taxpayers will gradually decrease over the next few years of implementation under HB 4774,” Chua said.

“The simplified tax system will increase the take-home pay of most individuals, putting more money in people’s pockets, which they can use to save for the future or spend on their families’ needs, such as for tuition or school expenses of their children,” Chua said.

Cua, who chairs the House panel that will study the CTRP, filed HB 4774 seeking various amendments to the National Internal Revenue Code last Jan. 17.

HB 4774’s proposed amendments to the Tax Code call for the lowering of PIT rates and a corresponding set of measures to compensate for the revenue losses arising from the reduced tax rates and  raise much-needed funds for the Duterte administration’s public investment program.

Cua’s bill retained the original DOF proposal of exempting those with a net taxable income of P250,000 and below,  but included a provision exempting the first P82,000 in 13th month pay and other bonuses from the computation as well.

The revised package under HB 4774 also includes lowering the rates for estate and donor’s taxes, adjusting automobile and fuel excise taxes, and expanding the value-added tax (VAT) base but retaining the exemptions enjoyed by senior citizens citizens and persons with disabilities.

Complementary reforms to this revised tax package include introducing a sugar-sweetened beverage tax, indexing the motor vehicle user’s charge to inflation, and granting an amnesty to past estate tax cases.

The estate tax, which is a tax imposed on the privilege of transferring ownership of properties upon the death of the owner, will also be reduced from the current maximum rate of 20 percent to 6 percent, under HB 4774.

Source: Manila Bulletin