I'm Giancarlo Enrico S. Pozon, a Wushu instructor, investor and Barrister... That's right, Barrister; I graduated from law school and took the Bar Exams, now I'm waiting for the results. I created this blog to make Philippine Law easy to understand for the average person. It's all about free legal advice. There are many law blogs. But the problem is that many of them are written for lawyers and law students. They use words that can't be understood by ordinary people.
Many lawyers, judges and law students consider themselves as superior to most human beings because of their knowledge of the law. It bothers me since the law is supposed to serve society. Since the law is meant to serve society as a whole, it is important that is must be understood by everybody.
This does not mean that we should all become lawyers. It means that although law is a highly specialized profession, the first duty of everybody in this profession is to make the law understandable to all; that's why all these articles are free legal advice.
Like I said, this blog is about law -but it's for the ordinary people, not the lawyers. It's for the ordinary folk so they will know what is good and bad for them, and that making them aware of the law will help us all improve society as a whole. This is free legal advice for everybody!
Republic Act 9504 is a law passed in 2008 that made several amendments to the National Internal Revenue Code. It has three (3) important features:
1.) Exemption of minimum wage earners from income tax
2.) Increase of personal exemptions
3.) Increasing Optional Standard Deduction to 40% of gross income and making it available to individual taxpayers.
The first item:
The idea of exempting minimum wage earners from income tax seems like a pretty good idea. But the problem is that minimum wage varies from place to place in the Philippines and is fixed by each Regional Tripartite Wage and Productivity Board. So what may be minimum wage in one place may not be minimum in the other. Another problem comes into view (something worse than the first.) Remember that tax exemptions must be complied with strictly or no exemption will be granted? If an employee's income goes up, he'll be subject to income tax. It therefore becomes a deterrent to working harder. People will not want a pay raise or they'll be taxed.
The second item:
Here, personal exemptions for individuals, heads of families as well as married person have been increased to Php50,000 per individual. This means a married couple can claim an annual exemption of Php100,000 per year for themselves. Also, exemptions for dependents have been increased to Php25,000. Here, the maximum limit of four (4) still applies. Hence, a family with four children may claim an annual exemption of Php200,000.
Note, however, that the head of a family cannot claim the exemption of an individual or of a married person. The same rule applies to the others as well. Remember, exemptions are to be taken literally unless the law creating them allows a liberal interpretation.
The third item:
The Optional Standard Deduction used to be 10% of the gross income and available only to corporations. Now, it has been increased to 40% and made available to individual taxpayers. This now means that a corporation can deduct 40% of its gross income as operating expenses. In case of individuals, the 40% is deductible from gross sales or gross receipts only and not the gross income.
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