Late in December 2014, there has been many articles in the social media discussing the expanded the list of de minimis benefits exempted from income tax on compensation, to include benefits under collective bargaining agreements (CBAs) and productivity incentive schemes. The inclusion of this additional item was described as “a fitting gift to our workers in this holiday season”. It is said as well that expanding the list of tax-exempt de minimis benefits was one of the demands of labor at the dialogue with the President in the last Labor Day commemoration in May 2014
A post from the Official Gazette of the Republic of the Philippines was well-shared in the social media, but what exactly are included in the expanded list?
On January 5, 2015, the Bureau of Internal Revenue issued Revenue Regulations (RR) No. 1-2015 to further amend previously issued regulations covering de minimis benefits to include:
(k) Benefits received by an employee by virtue of a collective bargaining agreement (CBA) and productivity incentive scheme provided that the total annual monetary value received from both CBA and productivity incentive scheme combined do not exceed ten thousand pesos (Php 10,000) per employee, per taxable year.
Currently, the full list of de minimis benefits which are not subject to income tax on compensation as well as fringe benefits tax:
- Monetized unused vacation leave credits of private employees not exceeding ten (10) days during the year;
- Monetized value of vacation and sick leave credits paid to government officials and employees;
- Medical cash allowance to dependents of employees, not exceeding P750 per employee per semester or P125 per month;
- Rice subsidy of P1,500 of one (1) sack of 50 kg. rice per month amounting to not more that P1,500;
- Uniform and clothing allowance not exceeding P5,000 per annum; (last amended by RR No. 8, 2012)
- Actual medical assistance, e.g. medical allowance to cover medical and heathcare needs, annual medical/executive check-up, maternity assistance, and routine consultations, not exceeding P10,000 per annum;
- Laundry allowance not exceeding P300 per month;
- Employees achievement awards, e.g., for length of service or safety achievement, which must be in the form of a tangible personal property other than cash or gift certificate, with an annual monetary value not exceeding P10,000 received by the employee under an established written plan which does not discriminate in favor of highly paid employees;
- Gifts given during Christmas and major anniversary celebrations not exceeding P5,000 per employee per annum;
- Daily meal allowance for overtime work and night/graveyard shift not exceeding twenty-five percent (25%) of the basic minimum wage on a per region basis;
- Benefits received by an employee by virtue of a collective bargaining agreement (CBA) and productivity incentive scheme provided that the total annual monetary value received from both CBA and productivity incentive scheme combined do not exceed ten thousand pesos (P10,000) per employee, per taxable year.
Any amount in excess of their respective ceiling shall be included in 13th month pay and other benefits in determination of the P30,000 nontaxable ceiling. Other benefits given by employers which are not included in the above enumeration shall not be considered as de minimis benefits, and hence, shall be subject to income tax as well as withholding tax on compensation income for rank and file employees or fringe benefits tax for managerial and supervisory employees.
The total amount of de minimis benefits that each worker-taxpayer can claim can reach P104, 225, up by P10,000 from the previous level of P94, 225, supposing all of the above items are availed. The list may seem long, however, these benefits are normally not being provided by most companies to their employees as these are not mandatory benefits. And even if all of the above items are granted to employees, the entitlement to some of these items are still subject to certain conditions, which should be meet before these can be received by the employees.’
- Revenue Regulations No. 2-98
- Revenue Regulations No. 3-98
- Revenue Regulations No. 5-2008
- Revenue Regulations No. 5-2011
- Revenue Regulations No. 8-2012
- Revenue Regulations No. 1-2015
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