Any Non-Taxable Compensation

July 25, 2012

People say there are two things that are certain in life – Death and Taxes.

I’m sure you have thought about this question: Is there any income that is not taxable here in the Philippines? Believe it or not, the answer is yes. One of the tax-exempt income is called “De Minimis” benefits which are exempt from income tax on compensation as well as from fringe benefit tax. De minimis benefits are facilities or privileges furnished by an employer to his employees that are of relatively small value and as a means of promoting the health, goodwill, contentment, or efficiency of his employees.

The following are the recent list of de minimis benefits that you can provide to your employees:

  1. Monetized unused vacation leave credits of employees not exceeding ten (10) days during the year;
  2. Medical cash allowance to dependents of employees not exceeding P750 per semester or P125 per month;
  3. Rice subsidy of P1,500 per month granted by an employer to his employees;
  4. Uniform and clothing allowance not exceeding P5,000 per annum;
  5. Actual yearly medical benefits not exceeding P10,000 per annum;
  6. Laundry allowance of P300 per month;
  7. Employee 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 P10,000.00 received by the employee under an established written plan which does not discriminate in favor of highly paid employees;
  8. Gifts given during Christmas and major anniversary celebrations not exceeding P5,000.00 per employee per annum;
  9. Flowers, fruits, books or similar items given to employees under special circumstances, e.g. on account of illness, marriage, birth of a baby, etc
  10. Daily meal allowance for overtime work not exceeding 25% of the basic minimum wage.

Certainly, you want to make your employees happy by reducing their taxes in a legal way without any additional costs. We believe that happy employees mean productivity, and effective employees mean more revenues.

If you have more queries in mind and you need consultation or tax planning in order to avoid tax exposure but will minimize the effect of taxes, you may need the help of tax experts. Triple i’s tax lawyers and tax accountants provide consultation and conduct tax planning or tax study making sure that clients will have peace of mind with regard to taxes.

By: Atty Marissa C Yambao CPA

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