Recently implemented by President Rodrigo Duterte’s 2018 resolutions is to implement a new tax reform that will benefit all. Introducing the Tax Reform for Acceleration and Inclusion or TRAIN law is set to affect the life of millions of Filipinos this 2018.
Simply explained TRAIN Law, this law means that workers who earn an annual income of P 250, 000 will be exempted from paying Income Tax. Those earning above the said price will be slapped with the increased tax and burden. But being it a new tax reform system, the country is still yet to experience the effects of the TRAIN Law.
Mon Abrea, TRAIN Law advocate and the Consulting Group President for this law, says that: “Small business are likewise expected to benefit from the TRAIN law.” Many articles have been talking about the individual effect of the new tax system, but how will the Train Law affect business in the Philippines?
1. Price hike in oil prices
Though there is an increase in take home pay for earners under P20, 000 people will still experience additional spending. An increase in oil prices also means an increase in transportation of goods throughout the country.
2. Increase in product prices
DTI Secretary Ramon Lopez assured the public that TRAIN will have minimal effect on prime commodities such as canned goods, rice, milk, and bread. But there will still be an increase on cars, sugar-sweetened products like soft drinks, and tobacco.
3. Decrease in certain product stocks
For those who sell sugar-sweetened products like soft drinks and such or tobacco, since there is an increase in their price buyers and even owners will think twice about buying such items regularly.
4. VAT Exemption from Small Businesses
The previous P1.9 million threshold has increase to P3 million, making small businesses earn and save more. This will also encourage interested entrepreneurs to create and transform their business ventures even more.
There are positive and negative effects of the TRAIN Law that will affect consumers and of course, SME’s. This is a big challenge to businesses and companies to step up. Not only upgrade their current services and offers, but also their digital presence to be able to convert leads into actual clients.
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