The Department of Finance (DOF) on Wednesday reported that small and medium enterprises (SMEs) benefited from tax breaks amounting to no less than P44.158 billion for the first six months of 2018 under the Tax Reform for Acceleration and Inclusion (TRAIN) law, 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.
In a report by the Bureau of Internal Revenue (BIR) to Finance Secretary Carlos G. Dominguez III at a recent executive committee meeting of the DOF, VAT collections mostly from its regional offices fell, but collections from the percentage tax and income tax increased from January to June this year.
Finance officials said that the figures indicate that that many SMEs have reaped benefits from raising the VAT threshold from P1.9 million to P3 million under the TRAIN law.
The finance chief explained that increases in the percentage- and income-tax collections 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 the tax-reform measure.
The BIR reported that total collections nationwide from the percentage tax rose to P44.158 billion during the first six months of the year, higher by 0.93 percent than the its goal of P43.744 billion and the 2017 collection of P38.241 billion for the same period.
Based on preliminary data from the BIR, income tax collections rose to P500.585 billion for the first half of the year, higher by 2.2 percent compared to the 2017 level of P489.456 billion as well as the BIR’s goal of P450.375 billion.
Total VAT collections for January to June this year reached P179.951 billion, expanding by 0.84 percent from the P178.435 billion recorded in 2017, but fell short of the BIR’s goal of P222.419 billion for the period.
Meanwhile, VAT collections amounted to P63.217 billion in the BIR’s regional offices from January to June this year, lower by 13.1 percent, from last year’s P72.813 billion.
Percentage-tax collections for the same period in the regions, however, rose by 48.9 percent to P18.079 billion, from P12.130 billion in 2017. The figure for the six-month period for percentage tax collections also exceeded the BIR’s goal of P14.803 billion for the same period.
Income-tax collections in the regions also rose by 0.42 percent to P207.332 billion, from P206.454 billion in the same period in 2017. This also surpassed the BIR’s goal of P198.618 billion for the first half of the year. With Manuel T. Cayon