REQUIREMENT: DETERMINE THE AMOUNT OF DEDUCTIBLE BUSINESS EXPENSE FOR THE YEAR ENDED

DECEMBER 31, 20A1

GAAP expenses Deductible Non-deductible
Salaries and wages 5,000,000 5,000,000
Special bonuses 2,000,000 2,000,000
Special bonuses April 1, 20A1 2,600,000 2,600,000
Regular bonuses (14th month pay) 3,000,000 3,000,000
Regular bonuses 20A0 1,200,000 200,000
Other employee benefits
De minimis benefits 2,000,000 1,500,000 500,000
Other benefits 1,200,000 1,200,000
Facilitation fees 300,000 300,000
Total 13,300,000 3,000,000

NOTES
Requisites for deductibility
- must be ordinary and necessary
- paid or incurred during the taxable year
- connected with trade, business or practice of profession
- supported by sufficient evidence
- not against the law, morals, public policy or public order
- it must have been subjected to withholding tax if applicable
Things to remember
- accrued at year that was asked; deductible
- de minimis benefits are not required to be subjected to withholding tax

- when there is excess of the threshold of de minimis, it should be

subjected to withholding tax for it to be deductible
- facilitation fees are illegal
- taxpayer cannot control what can be deducted