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TAXATION

 Compensation income (sec. 32 a 1) vs. fringe benefit (sec. 33)?


 Compensation income (sec. 32 a 1), subject to 5-32% progressive rates. Therefore the
compensation earner is required to report as part of his gross income.
 Fringe benefit (sec. 33), subject to final tax . This fringe benefit will constitute final payment on
the tax liability.
 Who is legally obliged to pay fringe benefits tax (or final tax)? It is in the revenue regulation 3-98
section 2.33 second paragraph, the tax impose under section 33 of the code shall be treated as
final income tax on the employees (manager or supervisor) which shall be withheld and paid by
the employer in a quarterly calendar business.
Pursuant section 57a of the tax code; The “employer” is legally obliged to pay final tax
on fringe benefits not the manager or supervisor.
“Final withholding tax system” under revenue regulation code 2-98 section 2.57a; it is
the “withholding agent” who is legally obliged to pay of that final tax not the recipient of the
same. Since it’s a legal obligation in case of breach the BIR will go after the employer not the
manager or supervisor.
 Are de minimis benefits tax exempt?
 Process on elimination?
 Section 33(a,b,c);
a. The tax pays fringe benefits gross up monetary value the applicable tax rate is a final tax.
(multiply tax pays * final tax rate = fringe benefit tax, this tax that must be withheld and paid by
the employer on a calendar quarterly basis pursuant to section 57a of the tax code)

b. Enumerates those taxable fringe benefits.

Clear definition of fringe benefits under revenue regulations 3-98 section b thereof 2.33,
fringe benefits may include good service or other benefit furnished or granted by an
employer in cash or in kind. In addition to basic salaries to an individual employee except
rank and file employees. Basic salaries to managers and supervisors are subject to fringe
benefits tax under section under section 33. And shall form part of the gross compensation
income not subject to these fringe benefit tax.

The employer may be an individual, corporate whether taxable or tax exempt.

The recipient must be the managerial or supervisory employees.

Fringe benefits received by rank and file employees according to the tax author are exempt
from income tax.

c. Section 33c item 3 thereof, the following fringe benefits are not taxable under this section.
Benefits given to rank and file employees whether granted in CBA or not, fringe benefits
received by rank and file employee are not subject to these final tax impose under section
33a. To the rank and file employees that should be treated as part of their gross income
subject to 5-32%.