If you’re an employee who earns P21,000 or less each month, you will no longer be required to pay personal income tax under the comprehensive tax reform plan (CTRP) bill, according to GMA News.
Department of Finance Undersecretary Karl Chua told the news outlet that the revised tax reform package, which is currently pending at the House of Representatives, will cause a P20,000 annual savings for those earning under the P21,000 income bracket.
“Tax rates for 99 percent of taxpayers will gradually decrease over the next few years of implementation under HB 4774,” he told GMA news, adding that the House committee is concerned that Congress would pass the bill without taking “revenue-generating measures” into account.
However, he shared that it will increase the take-home pay of many workers, enabling them to provide a better life for their families.
“The simplified tax system will increase the take-home pay of most individuals, putting more money in people’s pockets, which they can use to save for the future or spend on their families’ needs, such as for tuition or school expenses of their children,” explained Chua.
Following these tax exemption amendments, adjustments will be made to compensate for anticipated revenue losses.
photo: Daniel Razon facebook
A simpler, fairer tax system for poor to low-income Filipinos
The original proposal of the DOF to exempt those with net taxable income of P25,000 will still be retained, according to a Rappler report.
For example, if a call center agent has a gross income of P273,000 including his 13th month pay, he is earning about P21,000 a month. All of this as well as his other benefits will still be classified under the zero-tax bracket. With the current system, he would have to pay P21,867, even if he had two dependents. His net taxable income of P136,834 would still be taxed P8,500, in addition to the 20 percent in excess of P70,000.
“Under the tax reform plan, his take-home pay will effectively increase by P21,867 annually because he would no longer have to pay this amount of income tax under the current system,” explained Chua.
Continuing, he said that these reforms aim to create a fair and simpler tax system. “This tax policy reform under the bill is among the measures we are supporting to make the country’s tax system simpler, fairer, and more equitable, especially for the poor and low-income Filipinos.”
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