The Commission on Audit (COA) has urged the Senate to pay taxes on the six-figure bonuses received by about 1,500 Senate officers and employees even though the Senate leadership has declared these perks to be tax-exempt.
In its report on the Senate’s 2011 financial performance, the COA said the P107.054 million in withholding taxes remitted by the Senate last year was deficient as it did not include taxes on more than a dozen bonus packages that should be subjected to a 32-percent final tax.
The perks granted to Senate employees that the COA said should have been subjected to taxes were food subsidy (P500 per month), transition allowance (P200 per month), hospitalization benefits, longevity incentive benefit, medical allowance (P300), clothing allowance, educational assistance (P35,000), midyear economic assistance (equal to one month pay), midyear rice allowance (P15,000), efficiency incentive benefits (equal to one-month pay), cost-of-living allowance (equal to one-month pay), inflationary adjustment assistance (P12,200), financial relief assistance (P10,000), rice allowance (P15,000), grocery allowance (P8,000), additional food subsidy (P3,000), yearend package, and anniversary bonus.
“These personnel benefits are taxable income subject to withholding tax on the excess over their respective ceilings provided under Revenue Regulation 5-2011. It shall be considered as part of ‘other benefits’ and the employee receiving it will be subject to tax on the excess over P30,000 per annum ceiling per Revenue Regulation 10-2008,” the COA said.
Senate leaders led by Senate President Juan Ponce Enrile have argued that some of these benefits were considered fringe benefits, and therefore not taxable under Section 33 of Republic Act 8424, or the National Internal Revenue Code.
The COA said it was not disputing that some of the benefits granted to the rank-and-file employees were clearly tax-exempt.
But fringe benefits granted to personnel who are not classified as rank-and-file such as supervising legislative staff officers and managerial officers with the rank of director and above were another matter, the COA said.
It cited Revenue Regulation No. 5-2011 which defines fringe benefits which are not taxable as minimal benefits.