Professional Documents
Culture Documents
4th Floor Pelizloy Centrum, Lower Session Road, Baguio City, Philippines
REX B. BANGGAWAN, CPA, MBA
TAXATION
FRINGE BENEFIT TAXATION
FRINGE BENEFIT means any good, service or other benefit furnished or granted in
cash or in kind by an employer to an individual employee (except rank and file
employees).
Classification:
A.
B.
b.
c.
Traveling expense paid by the employer for the travel of the family members
of the employee
In connection with this, there must be a documentary evidence to support that the
foreign travel was for business meetings or convention; otherwise the entire cost of
the ticket including hotel accommodation and other expenses incidental thereto
shouldered by the employer shall be treated as taxable fringe benefits.
business meetings to be supported by official communication from business
associates abroad indicating the purpose of the meeting
business conventions to be supported by invitations or communications from the
host organization or entity abroad
Reasonable foreign travel expenses are exempt under fringe benefit tax; hence,
inland travel expenses such as for food, beverages and local transportation; cost of
economy and business class airplane ticket; and those within the limits as set out in
4 a and b above.
Household personnel
If shouldered by the employer the following personal expenses shall be taxable
fringe benefit:
a.
b.
Personal driver of the employee (if not for the convenience of the employer
such as doctor on call)
c.
Similar expenses as payment for homeowners association duties, garbage
dues, etc.
Expense account
General Rule: expenses of the employees that are paid for the employer are taxable
fringe benefit:
a.
expenses of a reimbursement type ( direct payment by the employer is not
necessary since subsequent reimbursement for the expense of the employee,
makes him the indirect payer of the expense)
b.
personal expenses (groceries etc.) even if receipted in the name of the
employer
Exception:
a.
Regular fixed entertainment and representation allowance this is treated as
additional compensation to the employee
b.
Expenses connected with the trade of the employer and is duly receipted in
the name of the employer- these are expenses of the employer
Life and Health insurance and other non-life insurance premium or similar amounts
in excess of what the law allows
Exception:
a.
contributions of the employer for the benefit of the employee pursuant to the
provision of existing laws, i.e.: SSS, GSIS, PhilHealth; etc
b.
the cost of premium by the employer for the group insurance of its employees
Exception:
a.
the education or study involved is directly connected with the employers
trade, business or profession; and
b.
there is written contract that the employee is under an obligation to remain in
the employ of the employer for a period of time mutually agreed upon
2.
Fringe benefits which are authorized and exempt form tax under special laws
2.
Benefits given to rank and file employee, whether given on a Collective
Bargaining Agreement or not
3.
Benefits given as required by the nature of, or necessary to the trade,
business or profession of the employer
4.
5.
Contributions of the employer for the benefit of the employee to retirement,
insurance and hospitalization benefit plans; and
6.
Final Tax
Gross-up rate
Effective January 1, 1998
34%
66%
Note to candidates:
The fringe benefit tax rates herein are complementary values of the final tax
(regular corporate income) tax and grossed-up value. It should be pointed out,
however, that the same is not a statutory formula and thus the rates will remain
unaffected even if the corporate income tax change unless specifically provided for
by an amendatory law.
Filing of Return
The fringe benefit tax withheld by the employer shall be remitted to BIR within 10
days after the end of each calendar quarter; however, for EFPS , 5 days later