The “De Minimis Benefits” are facilities or privileges that
are of relatively small value given to the employees by the employer which is
not subjected to income tax nor fringe benefit tax.
To
reward employee performance and to set incentives it is common for employers to
give compensations in cash or in kind to employees. According to the Philippine
regulations, these benefits are exempt of taxes under certain conditions.
Following
the tax code, benefits received are excluded from the computation of gross
income as long as it remains below P90,000 (effective 2018). It includes the 13th month pay,
Christmas bonuses, productivity and incentive bonuses, and other benefits of
the same nature in cash or in kind.
In addition to that, compensations of small value, called De Minimis Benefits, are also excluded from the computation of gross income. De Minimis Benefits have the purpose to promote the well-being and efficiency of employees and are limited to facilities or privileges of relatively small size.
De-Minimis
Benefits include:
● Monetized unused vacation leave credits, maximum of 10 days per year;
● Medical cash allowance to dependents of employees, maximum of P750 per semester of P125 per month;
● Rice subsidy up to P1,500 per month;
● Uniform and clothing allowance, up to P5,000 per year;
● Actual medical benefits, up to P10,000 per year;
● Laundry allowance, up to P300 per month;
● Employee achievement awards (loyalty reward, safety reward…) in forms other than cash or gift certificates, and in a maximum value of P10,000 per year in accordance to an established plan which does not discriminate to favor highly paid employees;
● Gifts given for Christmas, special festivities or special circumstances (marriage, illness) cannot be over P5,000 per employee per year;
● Daily meal allowances during overtime work must not exceed 25% of the basic minimum wage; Meal allowance is non-taxable only for overtime or graveyard shift.
● Monetized unused vacation leave credits, maximum of 10 days per year;
● Medical cash allowance to dependents of employees, maximum of P750 per semester of P125 per month;
● Rice subsidy up to P1,500 per month;
● Uniform and clothing allowance, up to P5,000 per year;
● Actual medical benefits, up to P10,000 per year;
● Laundry allowance, up to P300 per month;
● Employee achievement awards (loyalty reward, safety reward…) in forms other than cash or gift certificates, and in a maximum value of P10,000 per year in accordance to an established plan which does not discriminate to favor highly paid employees;
● Gifts given for Christmas, special festivities or special circumstances (marriage, illness) cannot be over P5,000 per employee per year;
● Daily meal allowances during overtime work must not exceed 25% of the basic minimum wage; Meal allowance is non-taxable only for overtime or graveyard shift.
Maximum PHP 120.00 per day based on PHP481.00 (Metro Manila minimum wage – Wage
Order No. NCR-19);
● Benefits
received by an employee by virtue of a collective bargaining agreement (CBA)
and productivity incentive schemes provided that the total annual monetary
value received from both CBA and productivity incentive schemes combined, do
not exceed ten thousand pesos (Php 10,000.00) per employee per taxable year.
Notes: You should be specific with the items and amount limit to be a valid non-taxable De Minimis benefits. Maybe you don't need to use this anymore since the tax exempted income is increased to P250,000 per year and P90,000 bonus. It might be good enough to increase employee's take home amount.