Tax reform’s levies aligned with ASEAN

The lowering of personal income tax (PIT) rates under the proposed Tax Reform for Acceleration and Inclusion Act (TRAIN) are in sync with the practices of other countries in the Association of Southeast Asian Nations (ASEAN), the National Tax Research Center (NTRC) said.

NTRC Executive Director Trinidad Rodriguez said the TRAIN, which exempts those earning a taxable income of R250,000 and below from paying the PIT, is along the same thresholds set by other economies in the region such as Malaysia, Singapore, and Thailand.

Rodriguez said Singapore, for instance, sets a tax-exempt threshold of 20,000 Singapore dollars, which is equivalent to R738,000, while Thailand’s threshold is 150,000 baht, or around R228,000.

In Malaysia, the threshold is 5,000 ringgits or R60,000; for Cambodia, 150,000 riels or R82,188; Laos, 12 million kips or R74,400; Myanmar, 2 million kyat or R76,000, Rodriguez said.

According to the Department of Finance (DOF), the proposed PIT cuts in the TRAIN will exempt some 83 percent of taxpayers from income taxation, giving them the much-needed relief after 20 years of nonadjustment of the tax system.

It will actually benefit 99 percent of families/households because of the hefty PIT cuts for salaried workers and the unconditional cash transfers for the poorest families, said the DOF.

“The minimum wage in these respective countries are well covered by the exemption, by the exempt threshold, similar to us. That’s on the PIT schedule,” NTRC's Rodriguez said during one of the earlier hearings held on the TRAIN by the Senate ways and means committee.

The Senate ways and means committee began the deliberations on the TRAIN, which was filed in the chamber by Senate President Aquilino Pimentel III as Senate Bill (SB) No. 1408, last March 22.

The Senate began conducting plenary debates on the revised measure, SB 1592, on Nov. 22 and finally approved it with substantial amendments last November 28.