The Effects of Train Law on the Performance of Local Manufacturing Company Offering Sugar-Sweetened Beverages: A Comparative Analysis

Authors: Ram Nichlo Basilonia, Raymart Cinco, Ivan Orante, Nicole Irish Cagampan, Sarah Mae Mamauag, Hendrix Valientes, Ghumthar Padeci, Ron Vincent Pascua, Al Jason Gallardo, and Rose Daphne Oller

Issue: 2021-2022


The recent implementation of RA No. 10963 or The Tax Reform for Acceleration and Inclusion commonly known as TRAIN Law came as the first package of the Comprehensive Tax Reform Program has brought many effects. Sweetened beverage is one of the goods affected by the TRAIN Law by the implementation of Sugar-Sweetened Beverage (SSB) excise tax. The Department of Finance (DOF) along with the Department of Health (DOH) supports this as part of a comprehensive health measure aimed to curb the consumption of SSBs and address the worsening number of diabetes and obesity cases in the country, while raising revenue for complementary health programs that address these problems. The researchers performed a Comparative Analysis aiming at the effect of the TRAIN Law on the prices of the Sugar-Sweetened Beverage by analyzing the causal contribution of different conditions and its effect on the performance of the companies affected. Is TRAIN law beneficial or a burden to these companies, in the case of this study, the Macay holdings Incorporated. This will be achieved by using the financial statements of the company as the source of the data needed and will serve as the basis for the results and conclusions gathered. The researchers also consider the 8-step planning process by O’Leary (2014) that should take place in all textual analysis. With this methodology the researchers came up with the result that the effect of the imposition of excise tax creates an increase in certain component of financial statement which reflect the performance of the company. Excise tax for the first and second quarters of 2018 amounted to ₱837 million and ₱1,064 million, respectively. Income tax expense has a material decrease due to the revisions of TRAIN Law for income taxes. As a result, Net Income after Income Tax decreased by 35% which shows a negative effect to the company’s financial performance. These findings lead the researchers to conclude that excise tax on sugar-sweetened beverages greatly affects the financial performance of the company this coincides with the assumption of Teitler (2014) that companies should routinely consider the effect of taxes on their financial performance.

Keywords: TRAIN Law,  Sugar-Sweetened Beverages,  Manufacturing Company