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PHILIPPINES: Personal Tax Allowances Increased in 2018 alongside New Product Levies

People earning up to a maximum of P250,000 (US$4,934) per annum in the Philippines will be exempted from paying personal income tax (PIT) from 1 January 2018. This PIT cut as part of the new Tax Reform for Acceleration and Inclusion (TRAIN) law was approved by the parliament on 13 December, now pending a formal endorsement by the Philippine President for it to take effect.

In the Philippines, income tax liability is calculated on an incremental basis. The PIT cut comes as part of the government’s bid to increase disposable incomes, especially of the lowest earners, and boost consumption. Before the PIT cut takes effect, current PIT rates range from 5% for those earning up to P10,000 (US$197) per annum to 32% for those earning more than P500,000 (US$9,867) per year.

To make for any tax revenue shortfall due to PIT cuts, TRAIN will apply levies on many products. For example, beverages containing caloric and non-caloric sweeteners will be taxed at P6 per litre, while those containing high fructose corn syrup will be taxed at P12 per litre. Moreover, higher excise duties will apply on goods including automobiles, tobacco, fuel and coal. However, milk including infant formula milk and instant coffee, 100% natural fruit and vegetable juices, as well as beverages containing coco sugar and stevia, will be exempted from the new levies.

Content provided by Picture: HKTDC Research
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