A recently passed measure under Senate Bill No. 56 (or its House equivalent – House Bill No. 2616), also known as the “Granting Increase in Take-Home Pay for All Working Filipinos Act” or the GINHAWA Bill, as introduced by Senator Win Gatchalian, seeks to enhance the progressivity of the Philippine tax system by introducing more equitable tax relief measures. The bill is intended to ease the financial burden of taxation on Filipino workers, allowing them to retain a greater portion of their income after taxes.
Proposed Amendments
Revision of the Individual Tax Table
|
Taxable Income per Year |
Proposed Income Tax Rate |
|
P400,000 and below |
0% |
|
Above P400,000 to P650,000 |
15% of the excess over P400,000 |
| Above P650,000 to P1,300,000 |
P37,500 + 20% of the excess over P650,000 |
| Above P1,300,000 to P3,200,000 |
P167,500 + 25% of the excess over P1,300,000 |
| Above P3,200,000 to P12,800,000 |
P642,500 + 30% of the excess over P3,200,000 |
|
Above P12,800,000 |
P3,522,500 + 35% of the excess over P12,800,000 |
Current Individual Tax Table
|
Taxable Income per Year |
Current Income Tax Rate |
|
P250,000 and below |
0% |
|
Above P250,000 to P400,000 |
15% of the excess over P250,000 |
|
Above P400,000 to P800,000 |
P22,500 + 20% of the excess over P400,000 |
|
Above P800,000 to P2,000,000 |
P102,500 + 25% of the excess over P800,000 |
|
Above P2,000,000 to P8,000,000 |
P402,500 + 30% of the excess over P2,000,000 |
| Above P8,000,000 |
P2,202,500 + 35% of the excess over P8,000,000 |
Other Income Tax-related proposals
|
Particulars |
Proposed Amendment |
Previous Rule |
|
13th Month Pay and Other Benefits |
P150,000 (Sec 3) |
P90,000 |
|
13th Month Pay and Other Benefits |
Inclusion of all compensation and benefits granted to persons engaged in election-related service by the COMELEC (Sec. 4) |
None |
|
Exclusion to Gross Income |
Holiday, Hazard, Overtime, and Night Shift Differential Pay, and Service Charges not exceeding P100,000 (Sec. 4) |
None |
|
Non-Taxable Fringe Benefits |
Inclusion of Life or Health Insurance and Other Non-Life Insurance Premiums or similar amounts (Sec. 5) |
None |
|
Additional Deduction for MICRO Taxpayers |
Additional 50% deduction on salaries, wages, and other forms of compensation paid to employees of the micro taxpayer. (Sec. 6) |
None |
|
Tax Credits on Special Discounts |
If given to PWDs, SCs, and Solo Parents under RA 7277 (Magna Carta for PWD), RA 9994 (Expanded SC Act of 2010″ and RA 8972 (Solo Parents Welfare Act) may be claimed as credits against normal income tax due during the same taxable year where the discount is granted |
None |
|
Extension of Deadline for Filing Return |
The Commissioner may now grant a reasonable extension of filing of returns of income during state of calamity or national emergency (Sec 7) |
None |
|
MICRO Taxpayers |
Micro Taxpayers will no longer be required to withhold creditable tax at source (Sec 8) |
None |
|
Cooperatives |
Removal of TIN requirement for renewal of Certificate of Tax Exemption (CTE) |
Cooperatives are required to provide TIN for Renewal of CTE |
Business Tax-related proposals
|
Particulars |
Proposed Amendment |
Previous Rule |
|
VAT Threshold |
P4,000,000 |
P3,000,000 |
|
Tax on Life Insurance Premiums |
Added provision where persons doing business similar akin to life and health insurance (i.e., pre-need companies, pension fund companies, health maintenance organizations) be subject to 2% of gross premium, plan payment or installment payments collected without any deduction for amount required by appropriate government regulatory agencies |
Subject to 12% VAT |
Key Takeaway
When enacted into law, the GINHAWA Bill is expected to ease the tax burden on Filipino taxpayers by enhancing income tax exemptions and expanding tax-free benefits, allowing individuals to retain more of their earnings. Over time, these measures may help stimulate consumer spending, improve taxpayer compliance, and encourage broader economic participation. Collectively, the reforms are positioned to support inclusive growth and contribute to the country’s long-term economic development.
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Article written by: Kyle Clarence L. Williams, CPA, MICB, RCA, CAT
