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REPUBLIC OF THE PHILIPPINES

CITY OF CEBU
YNTIG LAW FIRM

MARCH 12, 2016


MR. MICHAEL T. ROSARIO
Vice President- Operations
Philippine Global Systems, Inc

Dear Mr Rosario,

Referred to this firm for legal opinion with regard to Fringe Benefits and De
Minimis Benefits for taxation purposes.
This firm is of the opinion that:

Fringe Benefits
1. Fringe Benefits on Managerial and Supervisor employees.
The law imposed on the fringe benefits received by supervisors and
managerial employees. The law mandates that the employers shall assume
the Fringe Benefit Tax imposed on the managerial employees and
supervisors. But the law allows the employer to deduct such fringe benefit
tax as a business expense. Provided that the gross-up monetary value,
composed of the value of the fringe benefits and fringe benefit tax, is
authorized as a business deductions.
2. Fringe Benefits on Rank-and-File Employees.
The fringe benefits of rank-and-file are treated as part of his compensation
income. It is subject to income tax and withholding tax on compensation
income, which must be withheld and deducted by his employer.

Examples of Fringe Benefits:


1.
2.
3.
4.
5.
6.

Housing privileges
Expense account
Motor vehicle of any kind
Household expenses
Interest on loan at less than market value
Membership fees, dues and other expenses borne by the employer for his
employee, in social and athletic clubs
7. Expenses for foreign travels
8. Holiday and vacation expenses
9. Educational assistance to the employee or his dependents
10.Life or health insurance and other non-life insurance premium or similar
amounts in excess of what the law allows.
Note: Fringe benefit list is not exclusive.
Other Fringe Benefits which are not taxable:
1. Fringe Benefits are authorized and exempted from income tax under the Code
or under any Special Penal Law
2. Contributions of the employer for the benefit of the employee to retirement,
insurance and hospitalization benefit plans

3. Benefits given to the rank and file, whether granted under a CBA or not
4. De minis benefits
5. If the grant of the fringe benefit is required by nature of, or necessary to the
trade or business or profession of the employer
6. If the grant of the fringe benefit is for the convenience of the employer
Rates of Fringe Benefits
1. Normal fringe benefits tax: 32%
2. Non resident alien not engage in trade or business: 25%
3. Non resident alien or Resident alien employed by regional headquarters,
offshore banking units, foreign petroleum service contractors or
subcontractors or any Filipino individual who are occupying same positions
held by the alien employees: 15%

De Minimis Benefit
There are certain fringe benefits that are exempted from income tax and
withholding tax, even if received by Rank-and-file employees and Managerial and
Supervisory Employees.
1. Monetized used vacation leave credits of private employees not exceeding
10days
2. Monetized value of vacation and sick leave credits paid to government
employees
3. Medical cash allowance to dependents of employees not exceeding P750 per
employees per semester or P125 per month
4. Rice subsidy of P1500 or one sack of 50kg rice per month amounting to not
more than P1500
5. Uniform and clothing allowance not exceeding P5000 per annum
6. Annual medical assistance
7. Laundry allowance not exceeding P300 per month
8. Employees achievement awards (which must be in the form of tangible
personal property)
9. Gifts given during Christmas and major anniversary celebrations not
exceeding P5000 per employee per annum
10.Daily meal allowance for overtime work and night/graveyard shift not
exceeding 25% of basic minimum wage on a per region basis
Note:
a. This is the list of De minimis benefit which is exclusive.
b. Flowers, fruits, books or similar items given to employees under special
circumstances such as on account of illness, marriage, birth of a baby has
been excluded. Now other benefits is counted in determining the 82k
ceiling.
c. If there is a CBA granting such benefits it should not exceed 10k
d. The amount of de minimis benefits conforming to the ceiling prescribed shall
not be considered in determining the 82k ceiling of other benefits excluded
from gross income.
e. De minimis is excluded from the 82k ceiling
f. Other benefits fall on the 82k ceiling

Please be noted that this is based on the current tax laws, BIR resolutions and
Philippine jurisprudence. If you have further inquiries, you can contact me or my
associates directly. We will more than willing to entertain your questions.

Thank you,

Beam Trigo Yntig


Attorney-at-Law