Tax reform version in Senate up for approval

THE CHAIRPERSON of the Senate ways and means committee endorsed to the plenary on Wednesday, Sept. 20, Senate Bill No. 1592 — or what he has proposed to be the Senate’s version of the bill passed by the House of Representatives last June on the government’s tax reform package, a key component of President Rodrigo R. Duterte’s economic program.

In his speech Wednesday afternoon endorsing the bill, committee chairman Senator Juan Edgardo M. Angara itemized the following highlights of the bill which accorded in part with House Bill No. 5636 but also expanded on certain provisions of the House measure.

The bill exempts the first P150,000 annual taxable income and raises to P250,000 annually exemptions for taxpayers with four children. The bill also retains the P82,000 tax exemption for 13th month pay and other bonuses and the maximum P100,000 additional exemption for up to four dependents.

A media briefer provided by Mr. Angara’s office further explains that, “Based on BIR data, 81% or 6.1 million of the 7.5 million income taxpayers ( both wage earners and self- employed and professionals) will be exempt from paying taxes — triple the current 2 million exempt minimum wage earners.”

The tax exemption of P150,000 also applies to selfemployed and entrepreneurs, Mr. Angara said. The bill also “introduces a flat 8- percent tax on annual gross income for the self- employed and professionals,” including traders, sari- sari store and canteen operators, market vendors, hardwarestore owners, tricycle drivers and fishball vendors.

“SEPs ( self- employed and professionals) are ( thus) given the option of either the flat 8-percent tax or the schedule of new income tax rates we have outlined for compensation earners. They can basically choose the tax regime more favorable to them. This acknowledges that different entrepreneurs face different realities in different industries. And hopefully, incentivizes them to pay their taxes correctly,” Mr. Angara said.

VAT EXEMPTIONS

“The Senate version also raises the VAT (value-added tax)-exempt threshold on the sale or lease of goods and services — from P1.9 million to P3 million — exempting small business with total annual sales of P3 million and below not only from paying VAT,but also from filing the monthly VAT return and quarterly percentage tax returns,” Mr. Angara said in his speech. “This will provide relief to many small business owners.”