Philippine Tax Implications on Employee Benefits

Philippine Tax Implications on Employee Benefits


Tax Exempt De Minimis Benefits to Employees in The Philippines 

De minimis benefits are non-taxable up to a certain monetary limit, which is currently set at PHP 90,000 per year. This means that if the total value of the benefits received by an employee within a year does not exceed PHP 90,000, they will not be subject to income tax.

If your tax-free payroll allowance is set at P7,500 per month, then over a calendar year you have already used up the Tax Free PHP90,000. Therefore, any additional benefits received will be taxable as part of the annual personal tax assessment process. Annually in January you will be asked to review and approve your Tax return (ITR2316). This will show if you have Tax to pay or are due a refund.

For known additional benefits, Boomering are happy to agree with staff a regular payroll (additional tax) deduction to minimize any tax payable.

If your tax-free payroll allowance is set at P3,700 per month, or below P7,500, then over a calendar year you will likely have Tax Refund due on your Annual Tax Return. This depends on the how much your additional benefits total for the year. Example P3,700 for 12 months totals P44,400. Deducted from the P90,000 allowed De Minimis leaves P45,600 of additional Tax-Free earnings/benefits. 

Appendix A – Allowed De Minimis

Revenue Regulation No. 11-2018 itemized the updated list of De Minimis Benefits not subject to Income 
tax and Withholding Tax on compensation for all employees regardless of position or employment status:

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All other benefits such as commissions, bonuses, or incentives given by the employers or clients that are NOT included in the above enumeration shall not be considered De Minimis benefits, and hence, shall be subject to income tax as well as withholding tax on compensation income. It is important to note that there are limitations on the amount of these benefits, as exceeding the limit of PHP 90,000 will result in taxable income.

Appendix B – Standard Boomering Payroll Allowances

B.1) Standard Allowances Package for Employees with Monthly Salary starting P25,000 and up. 

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B.2) Standard Allowances Package for Employees with Monthly Salary below P25,000.

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