Special InTAX: Let's Get on the TRAIN (Tax Alert 5)
Special InTAX: Let's Get on the TRAIN (Tax Alert 5)
InTAX is an official publication of Tax Group of R.G. Manabat & Co.
Let's Get on the TRAIN
Revenue Memorandum Circular (RMC) No. 105-2017
On 29 December 2017, the Bureau of Internal Re-venue (BIR) released RMC No. 105-2017 entitled Revised Withholding Tax Table on Compensation Pursuant to the Amendments to the National Internal Revenue Code of 1997 as Introduced by Republic Act No. 10963, Otherwise Known as the “Tax Reform for Acceleration and Inclusion (TRAIN) Law”.
Why this matters
The RMC provides for the new fixed taxes and rates for compensation for withholding purposes, which will take effect from 01 January 2018 to 31 December 2022. With the release of the RMC, all employers are now obliged to apply the new income tax rates on their employees’ compensation beginning the first payout of 2018.
Key Points to Consider
The revised tax table no longer considers the civil status of the taxpayer following the deletion of personal and additional exemptions under the TRAIN law.
Below is the revised withholding tax table:
REVISED WITHHOLDING TAX TABLE Effective January 01, 2018 to December 31, 2022 |
||||||
| DAILY | 1 | 2 | 3 | 4 | 5 | 6 |
| Compensation Level (CL) | 685 and below | 685.00 | 1,096.00 | 2,192.00 | 5,479.00 | 21,918.00 |
| Prescribed Minimum Withholding Tax | 0 | 0.00 + 20% over CL |
82.19 + 25% over CL |
356.16 + 30% over CL |
1,342.47 + 32 over CL |
6,602.74 + 35 % over CL |
| WEEKLY | 1 | 2 | 3 | 4 | 5 | 6 |
| Compensation Level (CL) | 4,808.00 and below | 4,808.00 | 7,692.00 | 15,385.00 | 38,462.00 | 153,846.00 |
| Prescribed Minimum Withholding Tax | 0 | 0.00 + 20% over CL |
576.92 + 25% over CL |
2,500.00 + 30% over CL |
9,423.08 + 32 over CL |
46,346.15 + 35 % over CL |
| SEMI-MONTHLY | 1 | 2 | 3 | 4 | 5 | 6 |
| Compensation Level (CL) | 10,417 and below | 10,417.00 | 16,667.00 | 33,333.00 | 83,333.00 | 333,333.00 |
| Prescribed Minimum Withholding Tax | 0 | 0.00 + 20% over CL |
1,250.00 + 25% over CL |
5,416.67 + 30% over CL |
20,416.67 + 32 over CL |
100,416.67 + 35 % over CL |
| MONTHLY | 1 | 2 | 3 | 4 | 5 | 6 |
| Compensation Level (CL) | 20,833.00 and below | 20,833.00 | 33,333.00 | 66,667.00 | 166,667.00 | 666,667.00 |
| Prescribed Minimum Withholding Tax | 0 | 0.00 + 20% over CL |
2,500.00 + 25% over CL |
10,833.33 + 30% over CL |
40,833.33 + 32 over CL |
200,833.33 + 35 % over CL |
A quick comparison of the monthly withholding tax due of taxpayers earning Php250,000.00 per annum, or approximately Php20,833.33 per month, between the old and new withholding tax tables is provided below and shows the amount of increase in net pay from tax savings they can expect beginning January 2018.
| Taxpayer Status | Monthly Compensation | Old Withholding Tax | Revised Withholding Tax Table of 2018 | Increase in net pay |
| Z | 20,833.33 | 4,166.77 | 0.00 | 4,166.77 |
| S/ME |
20,833.33 | 3,125.08 | 0.00 | 3,125.08 |
| ME1/S1 | 20,833.33 | 2,604.08 | 0.00 | 2,604.08 |
| ME2/S2 | 20,833.33 | 2,083.33 | 0.00 | 2,083.33 |
| ME3/S3 | 20,833.33 | 1,625.00 | 0.00 | 1,625.00 |
| ME4/S4 | 20,833.33 | 1,208.40 | 0.00 | 1,208.40 |
Other Considerations
The Philippine Health Insurance Corporation (PHIC) issued Circular No. 2017-0024 to adjust the premium contributions of the employed sector to sustain the National Health Insurance Program (NHIP).
From January 2018 onwards, monthly premium contributions, which are excludable from gross taxable compensation income, shall be at the rate of 2.75% computed based on monthly basic salary, with a salary floor of Php10,000.00 and a ceiling of Php40,000.00, to be equally shared by the employees and their employer. With the removal of the salary brackets, computation shall be based on the following table:
| Basic Monthly Salary x 2.75% | Monthly Premium | Personal Share | Employer Share |
| 10,000 and below |
275.00 | 137.50 | 137.50 |
| 10,000.01 to Php39,999.99 |
275.02 to 1,099.99 |
137.51 to 549.99 |
137.51 to 549.99 |
| 40,000 and above |
1,100.00 | 550.00 | 550.00 |
Attached are copies of RMC No. 105-2017 and PHIC Circular 2017-0024 for reference.
Revenue Memorandum Circular No. 105-2017
Philhealth Circular Co. 2017-0024
DISCLAIMER: The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although R.G. Manabat & Co. endeavors to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.
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