Thursday February 22 , 2018
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Welcome to Du-Baladad and Associates

Dynamism, coupled with their expertise and long years of experience in the field of taxation and corporate law, prompted Benedicta Du-Baladad and Fulvio D. Dawilan to establish Du-Baladad and Associates, or BDB Law. BDB Law is a growing medium-sized firm that provides competent legal representation and exceptional service in the areas of taxation and corporate law to its wide array of clients.

BDB Law’s associates are equipped with extensive training and experience in handling tax controversies before the Court of Tax Appeals, the regular courts, the Bureau of Internal Revenue, and the Department of Finance. They are highly competent in providing tax and corporate advisory services to the firm’s multi-sectoral clients and assisting them as they work to achieve complex legal, business and financial goals.

The firm is dedicated to ensuring responsive, and high-quality service that is delivered with the strict adherence to the highest ethical standards.

BDB Law takes pride in its commitment to balance both the interests of its clients and that of the community.

We welcome you to our website. Please feel free to contact us to learn more about our services.

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CEO Corner

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Package 1 of the Government’s comprehensive tax reform program was passed into law last December 2017 and took effect January 1 of this year, 2018. There are 4 packages in this reform – the taxation of individual income and consumption, corporate, real property taxation, capital income. So far, only Package 1 has been passed.

Package 1 covers both individual income and consumption taxes. A notable feature carried in the reform is the shift in revenue source from income tax to consumption tax, and an attempt to heavily tax the rich while exempting the poor. The low income group and minimum wage earners were exempted, tax on middle income group significantly reduced, but tax on high income individuals called “ultra rich” were increased by 3%. The restructuring of the income tax system was a combination of widened tax bracket and rate adjustment. By 2013 (five years from now), tax rates will be reduced further by 5% points except those in the highest bracket.

The exemption level is P250,000 across-the-board to simplify compliance, regardless of type of income or status of the taxpayer, and is given in lieu of all other exemptions such as personal exemptions and health premiums. The exemption of minimum wage earner, however, was retained regardless of amount. Bonuses and 13th month pay to the extent of P90,000 remain exempt.

On consumption taxes, there was an effort to fix the VAT system and widen the VAT base by removing many VAT exemptions given under various laws. But the Government was not too successful in this regard because of pressure from various sectors with interest. Thus, focus was shifted to exciseable products such as oil, automobiles, cigarettes which were all increased. Sugar sweetened beverage was newly covered by excise tax on the pretext of being imposed as a health measure to control diabetes. Likewise, cosmetic surgery meant for enhancement of the body was slapped with excise tax, an experiment to include services within the ambit of excise tax, a tax usually imposed on goods only.

With the increase in excise tax on oil products, the desire to relieve the poor of tax burden was somehow diluted as this resulted in higher prices on commodities which ended up with the poor paying more taxes than before. The government have therefor offered subsidies to affected sectors in the form living allowances.

Overall, Package 1 delivered its promise to make the tax system more equitable and simplified. Tax filings were made quarterly (from monthly), penalties were rationalized and benchmarked against legal interest (now double the legal rate from a fixed 20% annual rate), it simplified tax filings and forms, it simplified bookkeeping and minimized compliance requirements.

In addition, it offered an option to MSMEs to pay a flat rate tax of 8% based on gross sales which shall be in lieu of both income and VAT, a big relief to those who cannot keep up with the difficult and costly requirement of bookkeeping. In addition, taxes on transfer of real properties, whether it be by sale, donation or by inheritance were harmonized at 6%, to remove tax arbitrage and planning.

Anent Package 1 is a twin measure called Package 1B which will offer a general amnesty and an estate tax amnesty to give taxpayers a fresh start, as a transition to a new and better tax regime. This, however, will be coupled with a relaxation of the bank secrecy law and a tightening of information gathering.

Now, we look forward to Packages 2 to 4 of the TRAIN, which hopefully will be given an easy and smooth ride in Congress.

Dick Du-Baladad
Managing Partner and CEO

 BDB Law gen chambers

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