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Oct 3, 2016
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The Department of Finance (DOF) has pushed to adjust taxation for the 13th month pay and other annual bonuses of working individuals including the midyear and Christmas bonuses.

The details of the DOF’s proposal has been submitted to Congress through its tax reform package, Philstar reported.

The DOF also has another proposal that aims to strip senior citizens and persons with disability from their tax exemptions.

Currently, they enjoy a 20-percent tax exemption for a variety of products and services on top of their exemption from the 12-percent value added tax.

These proposals are all in exchange for making those who earn a gross income below P250,000 a year tax-free.

On the other hand, those with a gross annual income of P250,000 and above will be given the following tax adjustments:

-P250,000 and P400,000 = 20 percent on the excess over P250,000
-P400,000 and P800,000 = P30,000 + 25 percent on the excess over P400,000
-P800,000 and P2,000,000 = P130,000 + 30 percent on the excess over P800,000
-P2,000,000 to P5,000,000 = P490,000 + 32 percent on the excess over P2,000,000
-P5,000,000 = P1,450,000 +  35 percent on the excess over P5,000,000

All percentages will be decreased by 5 percent for the second year onward.

In 2015, former president Benigno Aquino III signed a bill into law which increased the income tax exemption cap for all bonuses from P30,000 to P82,000.

Aquino's move got a positive reaction from the public, especially from the teachers' sector that had members who apparently had to pawn their ATM cards due to financial difficulties.

 

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