Finder is committed to editorial independence. While we receive compensation when you click links to partners, they do not influence our content.

A Day In The Life of TRAIN

The debate on whether TRAIN, the Philippines’s reformed tax law, is a boon or a curse is still raging and shows no signs of wearing down anytime soon. Social media has been flooded with both good and bad comments on and reactions to TRAIN, making it one of the hottest topics online right now.
One could say that’s a good thing because, at the very least, Filipinos are talking about it and sharing their ideas about the topic. The problem lies in whether TRAIN is doing more harm than good as its naysayers readily claim. In this post, we look at a day in the life of a working professional, a full-time mom, and a bright-eyed millennial to address the question, “Will TRAIN help us save money or not?”

The modern yuppie

For our purposes, we will define “yuppie” as a working professional that’s 30-40 years of age, has a steady and well paying job, earns at least P50,000 a month, and has no dependents. Let’s look at how the yuppie’s spending will change after TRAIN.

The rising millennial

A novice when it comes to taxes and salary deductions, the millennial has only a few years of experience as a working professional. He or she is 20-25 years of age, has a steady job, earns P25,000 a month, and has no dependents. How much did the TRAIN affect millennials? We take a look below.

The working mom

The working mom is an expert juggler; between managing her family and keeping afloat at her job, she also has to find time to create a family budget and run a household. She is 25-35 years of age,has a steady job, earns P25,000 a month, and has one dependent. Will the family budget be affected by TRAIN? Let’s find out below.

Is the change worth it?

The comparisons above show that even if prices of commodities rise, you can still save money if you learn to budget your take-home pay. Take note also, that the increase in spending shown above is at 10% across the board, which is an overestimation, to say the least. Spending varies per person or family, though, so your mileage may vary.
The important takeaway here is that, if you spend within your means and plan your budget around the new tax law, your life would be easier and you may even have some money left to add to your savings.
Although there’s a clamor due to the new, imposed excise taxes on non-essential services and sweetened beverages, there are also substantial reduction on personal income, estate, and donor’s taxes. Taxes have increased on certain passive incomes together with the excise taxes on petroleum products, automobiles, and cigarettes, but there’s a silver lining to the TRAIN cloud.

Simplified tax compliance

Whether you’ve just started a new job or are a seasoned workforce veteran, you can’t deny how complicated the Philippine tax system is. This was taken into consideration when Congress decided to implement the TRAIN law. Amendments were introduced to make tax compliance simpler and more accessible, including the following.
  • The Income Tax Returns shall not be more than 4 pages
  • The Tax Return for final and creditable withholding taxes shall be filed quarterly instead of monthly
  • With regard to estate tax, the following measures were adopted to simplify its computation and payment:
    • In lieu of actual funeral expenses (up to P200,000) and medical expenses (up to P500,000), Train increases the standard deduction (wherein no substantiation is required) from P1,000,000 to P5,000,000
    • Notice of death is no longer required
    • CPA certification is now required only if the gross estate is above P5,000,000 (up from P2,000,000)
    • The deadline for filing of estate tax return is now one year from death (before, 6 months from death)
    • Bank deposits left by the decedent may be withdrawn by the heirs subject only to 6% withholding tax. Before a certification from the BIR that estate tax has been paid was required.
  • Beginning January 1, 2023, the filing of VAT Return and payment of tax shall be done quarterly instead of monthly
  • The BIR is required to act on application for VAT refund within 90 days. Otherwise, the BIR official, agent or employee will be criminally liable.
  • The Financial Statements of a taxpayer should be audited if the gross annual sales, earnings, receipts or output exceed P3,000,000 (up from P150,000).

Amendments to Valued Added Tax (VAT)

To lessen the burden on taxpayers, the TRAIN comes with amendments to VAT.
  • Increase of VAT threshold from P1,919,500 to P3,000,000.
  • Starting 2019, the sale of drugs and medicines for diabetes, high cholesterol, and hypertension will be exempt from VAT.
  • Increase of VAT exemption for lease of a residential unit from P12,800 to P15,000.
  • Association dues, membership fees, and other assessments and charges collected by homeowners associations and condominium corporations are now expressly VAT-exempt.

Attracting foreign investors

The government has always been aggressive in its efforts to attract foreign investors—and one goal of TRAIN is to make the economic environment more attractive for them. One of the main objectives of the Department of Finance in this regard is to reduce corporate income tax rates and rationalize fiscal incentives.
As you can see, the TRAIN isn’t all that bad. The problem is the average Filipino will obviously see only what’s directly in front of him or her; without the commensurate tangible reforms and infrastructure, a tax increase is just that, a tax increase.
The administration must show transparency when it comes to rolling out projects, and these projects should be rolled out in time. There’s also the challenge of meeting collection targets, which will fall on the shoulders of revenue collection agencies. After this, implementing agencies must show diligence in spending incremental revenues efficiently.
Is the new tax reform an opportunity or a train crash waiting to happen?
We’ll have to wait and see if the pros outweigh the cons. It would be wise, however, for future tax reforms to focus more on simplifying taxpayer compliance, making the tax system more efficient, and plugging loopholes in the system. Imposing new taxes won’t put the government in the average Filipino’s good graces.
Right now, the important thing is to plan and budget accordingly and to remain vigilant so you’ll see where your taxes really go.

More guides on Finder

Ask an Expert

You are about to post a question on

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked provides guides and information on a range of products and services. Because our content is not financial advice, we suggest talking with a professional before you make any decision.

By submitting your comment or question, you agree to our Privacy Policy and Terms.

Questions and responses on are not provided, paid for or otherwise endorsed by any bank or brand. These banks and brands are not responsible for ensuring that comments are answered or accurate.
Go to site