De Minimis Benefits - Tax41 PDF

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Tax Exempt Compensation 1. De Minimis Benefits 1. Monetized unused vacation leave credits of private employees not exceeding ten (10) days during the year; (RR No. 11-2018) 2. Monetized value of vacation and sick leave credits paid to government officials and employees; (RR No. 5-2011) 3. Medical cash allowance to dependents of employees, not exceeding P1,500 per employee per semester or P250 per month; (RR No. 11-2018) 4. Rice subsidy of P2,000 or one (1) sack of 50 kg. rice per month amounting to not more than P2,000; (RR No. 11-2018) 5. Uniform and Clothing allowance not exceeding P6,000 per annum; (RR No. 11-2018) 6. Actual medical assistance, e.g. medical allowance to cover medical and healthcare needs, annual medical/executive check-up, maternity assistance, and routine consultations, not exceeding P10,000.00 per annum; (RR No. 5-2011) 7. Laundry allowance not exceeding P300 per month; (RR No. 5-2011) 8. 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; (RR No. 5-2011) 9. Gifts given during Christmas and major anniversary celebrations not exceeding P5,000 per employee per annum; (RR No. 5-2011) 10. 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; (RR No. 5-2011) 11. Benefits received by an employee by virtue of a collective bargaining agreement (CBA) and productivity incentive schemes provided that the total monetary value received from both CBA and productivity incentive schemes combined do not exceed P10,000.00 per employee per taxable year. (RR No 1-2015) 12. APPLICATION OF THE “DE MINIMIS” CONCEPT An employer who give a monthly rice subsidy to its employees are allowed only P2,000 monthly allowance per employee to be considered as “de minimis” as listed above. If the employer granted more than this amount, the excess might be included as taxable compensation income. The limitation stated in the above list are very important. Any excess on the limit will be taxable and, therefore, be subjected to the withholding tax. It is in the case when the employee is a rank-and-file employee, that the benefits be subjected to the withholding tax and the normal income tax rate. However, if the employee is a managerial or supervisory employee, it will be subjected to the 35% fringe benefit tax. But before you consider it being taxable under normal income tax rate or fringe benefit tax, you have to consider first the 13th month pay, bonuses plus the “excess of the de minimis” benefits received by the employee and compare it to the limit of P90,000 (TRAIN Law). II. 13th month and other benefits of not exceeding P90,000. III. Separation pay beyond the control of the employee. IV. Retirement pay for serving the employer for at least 10 years and with at least 50 years of age. V. Minimum Wage Earners (MWE) – statutory minimum wage, including holiday pay, overtime pay night shift differential pay and hazard pay. VI. Income of Overseas Contract Workers in their income from other country...