13th month pay to be taxed under new reform

The draft of the tax reform program under the Duterte administration suggested the lifting of tax exemption from workers' 13th month pay.

The tax on the 13th would still be lesser than the total tax exemptions of Filipinos earning under Php 250,000 annually  said Quirino Representative Dax Chua, also chairman of the House Ways and Means Committee.

According to Speaker Pantaleon Alvarez, the administration is studying if the action is "doable".


Congress is planning to pass the entire tax reform package next year.

The tax proposal suggests exemptions to remain for contributions to the Government Service Insurance System, the Social Security System and the Pag-ibig housing fund, union dues, gains from the sale of bonds and debt instruments, and gains from the redemption of shares in a mutual fund.

It also seeks to increase tax rates to up to 35 percent for those earning above 5 million a year over two years from 2018 to 2019.

After 2019, the taxable income levels will be reviewed every five years.

The economic team of Duterte is seeking to lower income tax rates for middle income earners to 25 percent from 32.

They said this is to make the country more competitive compared to its SouthEast Asian allies.

Duterte is also studying if it's possible to remove value added tax exemptions.MJM

SOURCE: ABS-CBN News

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