Finance Secretary Carlos Dominguez III said Wednesday small and medium enterprises received tax breaks amounting to “billions of pesos” in the first six months under the Tax Reform for Acceleration and Inclusion Act.
Dominguez said in a statement this occurred as SMEs were now covered by a higher value-added tax threshold and could now choose from two options to pay lower income taxes.
Data from the Bureau of Internal Revenue showed that from January to June this year, VAT collections mostly in the BIR’s regional offices fell, but collections from the percentage tax and income tax increased.
This indicated many SMEs had benefited from raising the VAT threshold from P1.9 million to P3 million under Train law.
Dominguez said increases in the percentage and income tax collections over the 2017 period indicated that SMEs and self-employed individuals that had not exceeded the VAT threshold were 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 Train law.
VAT collections in the first six months reached P63.217 billion in the BIR’s regional offices, lower than last year’s P72.813 billion. However, percentage tax collections in the regions rose to P18.079 billion from P12.130 billion a year earlier.