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Tax Exempt De Minimis Benefits under TRAIN

RA 10963 Philippines

(http://taxacctgcenter.org/wp-
content/uploads/2018/03/taxexempt_key.jpg)De minimis benefits are
benefits of relatively small values provided by the employers to the
employee on top of the basic compensation intended for the general
welfare of the employees. Being of relatively small values, the same is not
being considered as a taxable compensation and as such,  not subject to
income tax and withholding tax on compensation. The amount of de
minimis provided is a deductible salaries expense, while for the employee, it
would constitute as an additional salary that is not deducted withholding tax on compensation.

To further appreciate the tax exemptions, below is the updated list of de minimis benefits in the
Philippines both to managerial and rand-and-file employees with some items updated in amounts by
Revenue Regulations No. 11 – 2018 (RR 11-2018), the implementing rule of Tax Reform for
Acceleration and Inclusion (TRAIN) or Republic Act No. 10963 effective January 1, 2018 for guidance
and easy reference.

1. Monetized unused vacation leave credits of private employees not exceeding ten (10) days during
the year.

2. Monetized value of vacation and sick leave credits paid to government official and employees .

3. Medical cash allowance to dependents of employees, not exceeding P1,500 per employee per
semester or P250 per month (as amended by RR 11-2018).

4. Rice subsidy of P2,000 or one (1) sack of rice 50 kilogram rice per month amounting to not more
than P2,000 (as amended by RR 11-2018).

5. Uniform and clothing allowance not exceeding P6,000 per annum (as amended by RR 11-2018).
6. Actual medical assistance, e.g. medical allowance to cover medical and healthcare needs, annual
medical/executive check-up, maternity assistance, and routine consultations, not exceeding P10,000
per annun.

7. Laundry allowance not exceeding P300 per month.

8. Employees achievement awards, e.g. for length of service or safety achievement, which must be in
the form of tangible  personal property other than cash or gift certificate, with an annual monetary
value not exceeding P10,000 received by the employee under an established written plan which does
not discriminate in favor of highly paid employees;

9. Gifts made during Christmas and major anniversary celebrations not exceeding P5,000 per
employee per annum,

10. Daily meal allowance for overtime work and night/graveyard shift not exceeding twenty-five
percent (25%) of the basic minimum wage on a per region basis.

11. Benefits received by an employee by virtue of a collective bargaining agreement (CBA) and
productivity incentive schemes provided that the total monetary value received from both CBA and
productivity incentive schemes combined do not exceed P10,000.00 per employee per taxable year.

As further provided under Revenue Regulations No. 15-2011 that has become effective starting the
year 2011, all other benefits given by employers which 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. Please note also of the limitations as to amount because it
is material to qualify for exemptions. If you provide more than the limitations, the amount in excess of
the limit would be taxable and subject to withholding tax on compensation, if the recipient employee
is a rank-and-file, or fringe benefits tax (FBT) of 32% if a supervisory or managerial employee. This is
however subject to the rule on the P90,000 amount for 13th month pay and other benefits where
excess de minimis benefits may not be taxable if the total of such excess plus the 13th month pay
and other benefits is within the P90,000 limitation.

References:

Revenue Regulations No. 15-2011 (http://taxacctgcenter.org/wp-

content/uploads/2012/07/Revenue-Regulations-No.-5-2011.-De-minimis-benefits.pdf)

Revenue Regulations No. 8-2012 (http://taxacctgcenter.org/wp-content/uploads/2012/07/Revenue-

Regulations-No.-8-2012.-Deminimis-benefits.pdf)

Revenue Regulations No. 1-2015

(http://www.bir.gov.ph/images/bir_files/internal_communications_1/Full%20Text%20RR%202015/RR%201-
2015%202.pdf)

Revenue Regulations No. 11 – 2018 – TRAIN or R.A. No. 10963

Disclaimer: This article is for general conceptual guidance only and is neither an expert opinion, nor a
substitute for an expert opinion in itself. Please consult your preferred tax expert or consultant for the
specific details applicable to your circumstances.
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