Presidential Communications Sec. Sonny Coloma. INQUIRER file photo
MANILA, Philippines–Malacañang on Sunday announced a belated Christmas present for the country’s lowest income earners in the form of an additional P10,000 tax exemption for de minimis benefits.
Communications Secretary Herminio Coloma Jr. said the government will lose up to P17 billion in taxes, but noted that the move was “reasonable because millions of workers will benefit from it.”
De minimis benefits refer to minor benefits such as clothing allowance, laundry allowance, rice subsidy and vacation and sick leave credits converted into cash.
The increase in tax exemption will take effect next month through a new revenue regulation to be issued by the Bureau of Internal Revenue (BIR), he said.
“This is the product of President Aquino’s continuous dialogue with labor organizations in 2014,” Coloma said over government-run Radyo ng Bayan.
With the new regulation, he said, the total amount of benefits to be exempted would increase from P94,225 to P104,225.
Under BIR Revenue Regulation No. 10-2008, they are not subject to withholding tax if they are of “relatively small value and are offered or furnished by the employer merely as a means of promoting the health, goodwill, contentment or efficiency of his employees.”
They include Christmas or anniversary gifts of not more than P5,000 annually for each employee, and “daily meal allowance for overtime work not exceeding 25 percent of the basic minimum wage.”
They also cover “flowers, fruits, books or similar items given to employees under special circumstances” and “actual yearly medical benefits not exceeding P10,000.”