The Beginner's Guide to TRAIN (Tax Reform for Acceleration and Inclusion)


The year 2018 is looming around the corner, and the new year will begin with the kick-off of our new Tax system - the Comprehensive Tax Reform Program (CTRP) or TRAIN.

What is TRAIN


According to the Department Of Finance's website the "Comprehensive Tax Reform Program (CTRP) or TRAIN is to create a more just, simple, and more effective system of tax collection, as per the constitution, where the rich will have a bigger contribution and the poor will benefit more from the government’s programs and services." Meaning, the rich will be having the big slice of the tax pie while the poor will only have the small portion.

The 6 shades of TRAIN


TRAIN is divided into 6 categories namely;
    • Lowering the Personal Income Tax (PIT)
    • Simplifying Estate and Donor's Tax
    • Expanding the Value Added Tax (VAT) Base
    • Increasing the Excise Tax of Petroleum Products
    • Increasing the Excise Tax of Automobiles
    • Introducing an Excise Tax for Sugar-sweetened Beverages (SSB)

I will only discuss the categories highlighted above, as these are the points I find more important and can directly impact us.

The PIT


Lowering the Personal Income Tax

The goal is to lower the income tax of all taxpayers except the richest. As per the new tax system, individuals with an annual taxable income of Php 250,000 and below are exempted.

Below is the 3 year Tax implementation Table (2018 - 2020)


Annual Taxable Income (ATI)
Tax Rate (TR)
0 – 250,000 0%
More than 250,000 – 400,000 TR = ((ATI – 250,000) x 20%)
More than 400,000 – 800,000 TR = ((ATI – 400,000) x 25%) + 30,000
More than 800,000 – 2,000,000 TR = ((ATI – 800,000) x 30%) + 130,000
More than 2,000,000 – 5,000,000 TR = ((ATI – 2,000,000) x 32%) + 490,000
More than 5,000,000 TR = ((ATI – 5,000,000) x 35%) + 1,450,000

Excise Tax of Petroleum Products


Excise Tax on Petroleum

Increase the excise of petroleum products, which has not been adjusted since 1997. An excise tax is an indirect tax on selected goods that have negative externalities and are non-essentials. This is a measure used to discourage too much consumption of scarce resources and limit the bad effects of some products, such as pollution and congestion. It is a progressive form of taxation since those who consume more will pay more.


Fuel ProductsCurrent Tax System201820192020
Diesel per liter
Kerosene per liter
None 3 5 6
Regular Gasoline per liter 4.35 7 9 10
Premium Gasoline per liter 5.35 7 9 10
LPG per liter None 3 5 6
* For simplicity's sake other fuel products are not included.

Excise Tax of Automobiles


Excise Tax on Automobiles

Lower-priced cars will be taxed at lower rates while more expensive cars will be taxed at higher rates. This excise system will make SUV and luxury car owners contribute more.


Net Manufacturing / Importation Price (IP)
Current Tax System
New Tax System
Up to 600,000 2% 4%
More than 600,000 – 1,100,000 ((IP – 600,000) x 20%) + 12,000 ((IP – 600,000) x 40%) + 24,000
More than 1,100,000 – 2,100,000 ((IP – 1,100,000) x 40%) + 112,000 ((IP – 1,100,000) x 80%) + 224,000
More than 2,100,000 ((IP – 2,100,000) x 60%) + 512,000 ((IP – 2,100,000) x 120%) + 1,024,000

Excise Tax on Sugar-Sweetened Beverages


excise tax on sugar sweetened beverages

This is to promote a healthier Philippines. The Department of Health (DOH), supports this proposal as part of a comprehensive health measure aimed to curb the consumption of SSBs and address the worsening number of diabetes and obesity cases in the country.

    • The proposed excise tax rate is between P5 to P10 per liter depending on the ingredients and amount of sweetener used. The rate will be adjusted based on cumulative inflation.
    • Products Affected:
      • Sugar-sweetened juice drinks
      • Sugar-sweetened tea and coffee
      • All carbonated beverages that is mixed with sugar, whether caloric or non-caloric sweeteners
      • Flavored water
      • Energy and sports drink
      • Other powdered drink
      • Cereal and other grain beverages
      • Other non-alcoholic beverages mixed with sugar

The new tax system will be effective this coming January 1, 2018. Although the PIT is a blessing, the other categories are double-edged swords. We will be all venturing into the unknown with this new system and let us all wait and see what will be the results. After all, it is our lives in perspective.

If you want to dive deep into this topic, you can visit the Department of Finance website.


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