Amending de minimis

WE have previously discussed de minimis benefits in this column, which are exempt from withholding and income tax. In Revenue Regulations 5-2011, the Bureau of Internal Revenue (BIR) ruled that de minimis benefits only include the following:

1) monetized unused vacation leave credits of private employees not exceeding 10 days during the year as well as monetized value of vacation and sick leave credits paid to government officials and employees;

2) medical cash allowance to dependents of employees not exceeding P750 per employee per semester or P125 per month;

3) rice subsidy of P1,500 or one sack of 50-kilogram rice per month amounting to not more than P1,500;

4) uniform and clothing allowance not more than P4,000 per annum;

5) laundry allowance not more than P300 per month;

6) actual medical assistance like allowance to cover medical and healthcare needs, annual medical/executive checkup, maternity assistance and routine consultations not more than P10,000 a year;

7) employees achievement awards for length of service or safety achievement, which must be in the form of tangible personal property other than cash or gift check, with an annual monetary value not more than P10,000;

8) gifts given during Christmas and major anniversary celebrations not exceeding P5,000 per employee per year; and

9) daily meal allowance for overtime work and night or graveyard shift not more than 25 percent of the basic minimum wage on a per region basis.

All other benefits given by employers that are not included in the enumeration shall not be considered as “de minimis” benefits and shall be subject to income tax as well as withholding tax on compensation income.

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