MANILA — Small and medium enterprises (SMEs) received tax breaks amounting to billions of pesos for the first six months of 2018 alone under the Tax Reform for Acceleration and Inclusion (TRAIN) Act as they are now covered by a higher value-added tax (VAT) threshold and can now choose from two options to be able to pay lower income taxes, Finance Secretary Carlos Dominguez III said in a statement Wednesday.
A report by the Bureau of Internal Revenue (BIR) during an executive committee (ExeCom) meeting of the Department of Finance (DOF) showed that from January to June this year, VAT collections mostly in the BIR’s regional offices fell but collections from the percentage tax and income tax increased, indicating that many SMEs have now benefited from raising the VAT threshold from PHP1.9 million to PHP3 million under TRAIN.
Dominguez said increases in the percentage and income tax collections over the 2017 period indicate that SMEs and self-employed individuals that have not exceeded the VAT threshold are now opting to pay either the 8 percent income tax on gross sales or receipts and other non-operating income or the percentage tax and the graduated income tax rates under TRAIN.
From January to June this year, VAT collections amounted to PHP63.217 billion in the BIR’s regional offices, lower than last year’s PHP72.813 billion reported during the same period in 2017, according to BIR preliminary data reported during the Execom meeting.
However, percentage tax collections in the regions rose to PHP18.079 billion from PHP12.130 billion in 2017. The January-June figure for percentage tax collections also exceeded the BIR’s goal of P14.803 billion for this period.
Income tax collections in the regions, meanwhile, also rose to PHP207.332 billion from PHP206.454 billion in the same period in 2017. This also surpassed the BIR goal of PHP198.618 billion for this period.
For the entire country, income tax collections rose to PHP500.585 billion for the January-June period, higher than the BIR goal of PHP450.375 billion and the 2017 collection of PHP489.456 billion.
Total VAT collections for January to June was PHP179.951 billion, short of the BIR goal of PHP222.419 billion, but slightly higher than 2017’s PHP178.435 billion.
January-June 2018 total collections from the percentage tax rose to PHP44.158 billion, higher than the BIR goal of PHP43.744 billion and the 2017 collection of PHP38.241 billion for the same period. (DOF PR/PNA)
