By: Christienne Lois Dandoy
Almost two years after the peak of the COVID-19 pandemic, it’s time to start anew as the number of cases has gradually decreased and the eyes of the public begin to look to other paths. As predicted to be a year of hope, various changes in our tax system will be implemented at the beginning of 2023.
Amidst a pandemic, another problem arises as the inflation rate takes its peak due to the war between Russia and Ukraine. And so, like a roller coaster of emotions, the changes in the tax rules, indeed, are a mix of positive and negative news. Therefore, the taxpayers need to know and embrace the new set of rules and systems as we welcome 2023.
TAX TABLE FOR INDIVIDUAL INCOME TAX
Brought by the Tax Reform for Acceleration and Inclusion (TRAIN) Law under the Comprehensive Tax Reform Program, first on the list is the updated tax table for individual income tax, which is something to look forward to as income tax rates are set to be reduced as provided below:
Individual taxpayers with annual taxable income amounting to Php 250,000 or below are exempted from paying income tax. Taxpayers affected by the further decrease in tax rates are those earning more than Php 250,000 but not over Php 8 million. They used to be subject to the graduated rates of 20% to 32%. Starting January 1, 2023, they will be subject to lower income tax rates ranging from 15% to 30%. High-income earners with more than Php 8 million taxable income will continue to be subjected to a 35% rate.
QUARTERLY REPORTING OF VAT RETURNS
BIR Form No. 2550-M (Monthly Value-Added Tax Declaration) is no longer required to be filed and paid beginning in 2023. The filing and payment shall be made within 25 days following the close of each taxable quarter or on a quarterly basis using BIR Form No. 2550-Q (Quarterly Value-Added Tax Return).
The said change will only require taxpayers to file a total of four VAT returns as compared to the standard 12 times of filing within the taxable year. This will also provide ample time to gather all necessary supporting documents for the taxpayer’s claim of input VAT.
Dealing with these regular changes in taxation can be exhausting and overwhelming most of the time, but knowing the correct rules and information is necessary to overcome the unknown.