What is the Tax Reform Program?

About CTRP

The Comprehensive Tax Reform Program, or CTRP, is a set of legislative bills aimed at rapidly modernizing governance, continuing public investments, and pursuing market-friendly reforms to achieve a strong economic rebound. By making the tax system fairer, simpler, and more efficient, additional—and a more sustainable stream of—revenues will be generated to make meaningful investments for the Filipino people.

Package 1: TRAIN Law

The Tax Reform for Acceleration and Inclusion (TRAIN) Law, or Republic Act (RA) No. 10963, corrects the longstanding inequity of the tax system by reducing income taxes for 99 percent of income taxpayers, thereby giving them relief after 20 years of non-adjustment. It also raises significant revenues to fund the President’s priority infrastructure programs and social service programs to reduce poverty incidence from 21.6 percent in 2015 to 14 percent by 2022.

PHP250,000
The threshold for those with annual taxable income below this figure are now exempt from paying personal income tax.

15%-30%
Lower tax rates for the rest of taxpayers (except the richest) by 2023

8%
Flat tax on gross sales in lieu of income and percent tax is now an option for small and micro self-employed and professional taxpayers 

10,000,000
Number of poorest households and individuals who received cash transfers of PHP 200 per month in 2018 and PHP 300 per month in 2019 and 2020 to offset the moderate but temporary increase in prices due to TRAIN.

Package 1B: Tax Amnesty

RA No. 11213 allows errant taxpayers to affordably settle their outstanding tax liabilities while also providing the government with additional revenues for its priority infrastructure and social programs. At the same time, it signals the start of a more aggressive tax enforcement campaign by tax authorities.

Covering the estate of decedents who died on or before December 31, 2017, the estate tax amnesty allows heirs to have the unpaid estate taxes settled at the rate of 6 percent without penalty.

Though it was signed into law in February 2019, the President vetoed the grant of general tax amnesty due to lack of safeguards against tax evasion. He also vetoed provisions under estate tax amnesty such as the one-time declaration and settlement of estate taxes on properties subject to multiple unsettled estates, and the presumption of correctness of the estate tax amnesty returns.

Package 2: CREATE

The Corporate Recovery and Tax Incentives for Enterprises (CREATE) Law is the largest fiscal stimulus for businesses in recent history.

PHP 1 trillion
Worth of tax relief to be delivered over the next 10 years through CREATE
20%
Income tax rate reduction for micro, small, and medium enterprises (MSMEs) from the previous rate of 30%
25%
Income tax rate reduction for large corporations from 30%

CREATE also provides other forms of tax relief which are part of a package of economic recovery measures implemented by the government to address the varying needs and concerns of the business sector brought about by the ongoing COVID-19 pandemic.

CREATE also provides for a generous and flexible tax incentive system that is performance-based, time-bound, targeted, and transparent. These principles have been unanimously recognized by stakeholders during hearings and consultations. The tax incentives system under CREATE balances the interests of all stakeholders while remaining faithful to the fundamental principles and mindful of the country’s fiscal challenges.

Package 2+: Sin Taxes

Package 2+ proposes increasing taxes on tobacco, alcohol, and e-cigarette products to fund universal health care (UHC) and to reduce the incidence of risks associated with the consumption of “sin” products.

PHP 40 per liter
Increased unitary excise tax for fermented liquor effective 2019. An additional PHP 5 per liter shall be imposed from 2020 to 2022 then a 10% increase every year thereafter. 

PHP 40 per proof liter
Increased excise tax rate for distilled spirits effective 2019, followed by an additional PHP 5 per proof liter from 2020 to 2022. From 2023 onwards, it will be an additional 10%. For the ad valorem rate it is proposed at 25% from 2019 onwards.

10%
Increase in specific tax rate for wines every year starting 2019. 

PHP 10
Increase in the excise tax on cigarettes effective 2020

Package 3: Real Property Valuation

Package 3 of the Comprehensive Tax Reform Program (CTRP) will broaden the tax base used for property-related taxes of the national and local governments, thereby increasing government revenues without increasing the existing tax rates or devising new tax impositions.

Among a host of benefits, the Real Property Valuation Reform will eliminate wide disparities, achieve consistency in real property valuation, and provide national and local governments, businesses, financial institutions, lenders, and investors with greater confidence in valuation reports.

Motor Vehicle User’s Charge