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FRINGE

BENEFIT

FRINGE BENEFIT
FRINGE BENEFIT TAX – is a final income tax on the employee which shall be withheld

FRINGE BENEFIT TAX

is a final income tax on the employee which shall be withheld and paid by the employer on a quarterly basis.

FRINGE BENEFIT TAX – is a final income tax on the employee which shall be withheld
FRINGE BENEFIT – FRINGE BENEFIT means any good, service, or other benefit furnished or granted by
FRINGE BENEFIT
– FRINGE BENEFIT means any 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) such as, but
not limited to the following:
1.
Housing
2.
Expense Account
FRINGE BENEFIT 3. Vehicle of any kind 4. Household personnel, such as maid, driver and others
FRINGE BENEFIT
3.
Vehicle of any kind
4.
Household personnel, such as maid, driver and others
5.
Interest on loan at less than market rate to the extent of the
difference between the market rate and actual rate granted.
6.
Membership fees, dues and other expenses borne by the
employer for the employee in social and athletic clubs and
similar organizations
FRINGE BENEFIT 7. Expenses for foreign travel 8. Holiday and vacation expenses 9. Educational assistance to
FRINGE BENEFIT
7.
Expenses for foreign travel
8.
Holiday and vacation expenses
9.
Educational assistance to the employee or his
dependents; and
10.
Life or health insurance and other non-lire insurance
premiums or similar amounts on excess of what the law
allows.
instrumentalities
instrumentalities

PERSONS LIABLE

The EMPLOYER (as a withholding agent), whether individual, professional partnership or a corporation, regardless of whether the

corporation is taxable or not, or the government and its

fringe benefit
fringe benefit

TAX RATE : 35% effective Jan 1, 2018

The 35% tax rate shall be imposed on the Grossed-up monetary value of the Fringe benefit furnished to an employee (except rank and file)

Note: If the fringe benefit is required by the nature of, or necessary to

the trade, business or profession of the employer, or when the fringe

benefit is given for the convenience of the employer = Not taxable

SPECIAL FBT RATES – NRANEBT 25% – *Aliens employed by regional HO 15 % – *Aliens

SPECIAL FBT RATES

NRANEBT 25% *Aliens employed by regional HO 15 % *Aliens employed by OBU 15% *Aliens employed by Petroleum Service Contractors and Subcontractors 15%

*Filipino employed occupying same position as above *If the benefit is already existing prior the effectivity of TRAIN LAW

GROSSED UP MONETARY VALUE “ GMV ” of the fringe benefit shall be determined by dividing

GROSSED UP MONETARY VALUE

GMVof the fringe benefit shall be determined by dividing the monetary value of the fringe benefit by the Grossed up divisor. The Grossed up divisor is the difference between 100% and the

applicable rates. Grossed-up MV= Monetary value / 65%

FRINGE BENEFITS NOT SUBJECT TO FBT 1.Fringe benefits not considered as gross income – a. if
FRINGE BENEFITS NOT
SUBJECT TO FBT
1.Fringe benefits not considered as gross income –
a.
if it is required or necessary to the business of employer
b.
if it is for the convenience or advantage of employer
2.
Fringe Benefit that is not taxable under Sec. 32 (B) – Exclusions from
Gross Income
3.
Fringe benefits not taxable under Sec. 33 Fringe Benefit Tax:
a.
Fringe Benefits which are authorized and exempted under
special laws, such as the 13th month Pay and Other Benefits with the
ceiling of P90, 000.
plans;
plans;

FRINGE BENEFITS NOT SUBJECT TO FBT

b. Contributions of the employer for the benefit of the employee to retirement, insurance and hospitalization benefit

c. Benefits given to the Rank and File Employees, whether granted under a collective bargaining agreement or not; and

d. The De minimis benefits benefits which are relatively

small in value offered by the employer as a means of promoting

goodwill, contentment, efficiency of Employees

FRINGE BENEFITS NOT SUBJECT TO FBT – The term “ Rank and File Employees ” shall

FRINGE BENEFITS NOT SUBJECT TO FBT

The term “Rank and File Employeesshall mean all employees who are holding neither managerial nor supervisory position as

defined in the Labor Code

In the case of rank and file employees, fringe benefits other than

those excluded from gross income under the Tax Code and other special laws, are taxable under the individual normal tax rate.

TAXABLE FRINGE BENEFITS HOUSING FRINGE BENEFITS MONETARY VALUE 1. LEASE of residential property 50 % x
TAXABLE FRINGE
BENEFITS
HOUSING FRINGE BENEFITS
MONETARY VALUE
1. LEASE of residential property
50 % x rental payments
2. ASSIGNMENT of residential property
(5% x FMV or ZV whichever is higher) x
50
%
3. Purchase of residential property on
(5% x AC) x 50 %
INSTALLMENT
4. Purchase of Residential property
FMV OR ZV whichever is higher
ownership transferred to employee
Non taxable Housing Fringe Benefit 1. Privilege of Armed Forces of the Philippines 2. Housing facility
Non taxable Housing Fringe
Benefit
1.
Privilege of Armed Forces of the Philippines
2.
Housing facility located within 50 meters from business premises
3.
Temporary housing = 3 months or less
TAXABLE FRINGE BENEFITS MOTOR VEHICLE FRINGE BENEFITS MONETARY VALUE 1. Er LEASES and maintains fleet of
TAXABLE FRINGE
BENEFITS
MOTOR VEHICLE FRINGE BENEFITS
MONETARY VALUE
1.
Er LEASES and maintains fleet of cars
50 % x rental payments
2.
Er OWNS and maintains fleet of cars
(AC/5) x 50%
3.
Purchase by INSTALLMENT;
(AC/5)
ownership=ee; exclusive of interest
4.
Purchase = ownership transferred to
AC
employee
5.
Cash is given= ownership = ee
Cash received
6.
Er shoulders certain amount
Amount shouldered
TAXABLE FRINGE BENEFITS Yacht- subject to FBTx, Monetary Value = ( AC / 20 yrs) Aircraft-

TAXABLE FRINGE BENEFITS

Yacht- subject to FBTx, Monetary Value = ( AC / 20 yrs) Aircraft- eg., helicopter and airplane = considered for business use, therefore, not subject to FBTx

a. b.
a.
b.

TAXABLE FRINGE BENEFITS

EXPENSE ACCOUNTS ; To be taxable

Expenses paid by employer (receipt should not be in the name of the employer, and should not be in relation to work)

Personal expenses such as groceries consumed by family is taxable whether or not receipted in the name of the employer.

TAXABLE FRINGE BENEFITS HOUSEHOLD EXPENSES - Expenses of employee for household personnel borne by the employer
TAXABLE FRINGE
BENEFITS
HOUSEHOLD EXPENSES
-
Expenses of employee for household personnel borne by the
employer
-
E.g. expenses paid for maid, drivers, personal guards,
owener’s association dues
home
MV= (12 Principal
MV=
(12
Principal

TAXABLE FRINGE BENEFITS

INTEREST ON LOANS @ LESS THAN MARKET VALUE

%

less

percentage

assumed

by

employee)

x

TAXABLE FRINGE BENEFITS MEMBERSHIP DUES, FEES, AND OTHER EXPENSES for SOCIAL and ATHLETIC CLUBS Entire amount

TAXABLE FRINGE BENEFITS

MEMBERSHIP DUES, FEES, AND OTHER EXPENSES for SOCIAL and ATHLETIC CLUBS

Entire amount paid is subject to FBTx

TAXABLE FRINGE BENEFITS EXPENSES OF FOREIGN TRAVEL 1. Inland travel= food, beverage, and local transportation =
TAXABLE FRINGE
BENEFITS
EXPENSES OF FOREIGN TRAVEL
1.
Inland travel= food, beverage, and local transportation = NOT subject to
FBTx
Lodging= everything in excess of US $ 300/day is TAXABLE
2.
AIRFARE
Economy and business class= non taxable
1 st class = 30 % of the ticket price is subject to FBTx
NOTE: the above rules will only apply if there are documented evidences
proving that there is work related approved foreign travel. If THERE ARE NO
EVIDENCES, then EVERYTHING will be subject to FBTx
to FBTx
to FBTx

TAXABLE FRINGE BENEFITS

HOLIDAY AND VACATION EXPENSES

- All expenses relating to holiday and vacation expenses are subject

to FBTx
to FBTx

TAXABLE FRINGE BENEFITS

HOLIDAY AND VACATION EXPENSES

- All expenses relating to holiday and vacation expenses are subject

1. GR: taxable
1.
GR: taxable

TAXABLE FRINGE BENEFITS

EDUCATIONAL ASSISTANCE

Education of the EMPLOYEE

Except: if a. directly connected to the trade and business of the employer AND

for

by the

b. There is a bond (obligation to remain employed

employer for an agreed upon period of time)

Except: if it is
Except:
if
it
is

TAXABLE FRINGE BENEFITS

EDUCATIONAL ASSISTANCE 2. Education of the employee’s DEPENDENTS GR: taxable

provided

though

competitive

scheme

under

scholarship program of the Company.

TAXABLE FRINGE BENEFITS INSURANCE BENEFIT Everything that is in excess of what the law requires. e.g.,

TAXABLE FRINGE BENEFITS

INSURANCE BENEFIT Everything that is in excess of what the law requires. e.g., insurance of the employee’s whole family, insurance of his house, etc

THANK YOU Jmc March 2018
THANK YOU
Jmc
March 2018