Chapter 4

• Train law - the first package of the Comprehensive Tax Reform Program proposed by Duterte administration.
• Train law - it's primary goal is to make the tax system more simple, fairer, and more efficient while also generating revenue for the government's infrastructure and social programs.
• Under train law, the corporate income tax rate remains at 30% on net taxable income
• The train law retains the minimum corporate income tax at 2% of the gross income of corporation.
• The train law allows corporations to opt for standard deduction of 40% of gross income in lieu of itemized deductions
• Final tax rate (%) of:

  Interest from currency bank deposits - 20%

  Royalties - 20%

  Prizes exceeding - 20%

  Other winnings - 20%

  Capital gains from sale - 15%
• The train law also imposes a preferential tax rate of 10% on the taxable income of regional operating headquarters (ROHQs) and regional headquarters (RHQs) of multinational companies
• No payment returns - refers to the tax return that is not accompanied by any payment where the same is filed with any authorized BIR receiving office.
• Offshore banking unit - is a branch, subsidiary or affiliate or a foreign banking corporation located in an offshore financial center which is duly authorized by the BSP.
• Unrelated trade - business or other activity is an activity which is not substantially related to the exercise or performance of the school or hospital’s primary purpose or function such as but not limited to rental income from available school spaces or facilities.
• proprietary educational institution - is any private school maintained and administered by private individuals or groups with an issued permit to operate from the DepEd, or CHED, or TESDA.
• Gross income - means gross sales less sales return
• Corporation - an artificial being created by operation of law, having the right of succession and the powers, attributes and properties expressly authorized by law or incident to its existence.