TRAIN Package 1A - Vetoed provisions

5 provisions from the bill were vetoed by the President, so they are not enacted into a law.
The constitution of the Philippines provides that "the President shall have the power to veto any particular item or items in an appropriation, revenue, or tariff bill".

1. Reduced income tax rate of employees of Regional Headquarters, Regional Operating Headquarters, Offshore Banking Units, and Petroleum Service Contractors and Subcontractors.

I means, they cannot enjoy preferred tax rate. Normal personal income tax will be applied.

2. Zero-rating of sales of goods and services to separate customs territory and tourism enterprise zones.

Only sales and delivery of goods and services rendered to provisions are vetoed. It means, you have to charge VAT even when you sells goods/services to ECOZONE companies. Previous law recognized separate customs territory like Special Economic Zone (SEZ or ECOZONE).

3.  Exemption from percentage of gross sales/receipts not exceeding five hundred thousand pesos (P500,000).

They still need to pay 3% percentage tax instead of 12% VAT.

4. Exemption of various petroleum products from excise tax when used as input, feedstock, or as raw material in the manufacturing and petrochemical products, or in the refining of petroleum products, or as replacement fuel for natural gas fired combined cycle power plants.

Input VAT is not recognized for petroleum products. It means, you have to pay VAT for any purchase of petroleum products.

5. Earmarking of incremental tobacco taxes.
To guarantee the original health care sector share from this tax.


Notes: VETO Message
Messages of the President of the Philippines expressing veto on legislative bills. An exercise of veto power stops the enactment of a bill and returns it to the congress it originated. As of January 12, BIR didn't issue the clarification on the vetoed provision above #2. How to translate the status. Apply the former provision (recognizing separate custom territories) or regard as this provision is removed?