Employment Tax

Philippines | 2025 year-end reminders on employment and individual taxes

Summary

This alert contains general information on the following:

1. Withholding tax on compensation
2. Substituted filing of BIR Form 1700
3. Fringe benefit tax
4. Tax treatment of equity-based compensation
5. Other relevant issuances and updates on employment and individual taxation

The detail

Withholding tax on compensation

General rules

Guidelines
Coverage	Employer	Compliance
Withholding Tax on Compensation (WTC) covers all employed individuals both citizens and foreign nationals deriving income for services rendered in the Philippines under an employer-employee relationship.	The employer (local company) is constituted as the withholding agent of the Bureau of Internal Revenue (BIR).	Monthly  The employer is required to compute and withhold the correct taxes due on the employeesʼ compensation using the prescribed tax table and remit the taxes to the BIR and remit the WTC using the Monthly Remittance Return of Income Taxes Withheld on Compensation (BIR Form 1601C) within the prescribed deadlines.
	Employer also means any person paying compensation on behalf of a non-resident alien individual, foreign partnership, or foreign corporation who is not engaged in trade or business in the Philippines.	Annual Every December, employer is required to compute the annualized taxes of the employees for the year and likewise comply with the annual reportorial requirements: In case of over withholding of taxes, the amount shall be refunded to the employees no later than January 25 of the following year. Distribution of Certificate of Compensation Payment/Tax Withheld for Compensation Payment With or Without Tax Withheld (BIR Form 2316 to the employees on or before January 31 of the following year. Submission of Annual Information Return of Income Taxes Withheld on Compensation (BIR Form 1604C) and the related schedule of Alphabetical List of Employees on or before January 31 of the following year. Submission of the required documents to the BIR in relation to employees qualified for substituted filing on or before February 28 of the following year.

Annual reporting requirements

1. Submission of BIR Form 1601-C for December 2025 is due on the following dates:

Deadline	Taxpayer type and group classification
12 January 2026, Monday	Group D and Group E under the Electronic Filing and Payment System (EFPS)
13 January 2026, Tuesday	Group C under EFPS
14 January 2026, Wednesday	Group B under EFPS
15 January 2026, Thursday	Group A under EFPS For manual filers, submission and remittance of WTC
20 January 2026, Tuesday	remittance of WTC for all EFPS filers
26 January 2026, Monday	refund of excess taxes withheld on compensation by employers as a result of the year-end adjustment

 

2. Submission of 2025 BIR Form 1604-C and F and Alphabetical list of employees and distribution of 2025 BIR Form 2316/2306 to the employees is due on 2 February 2026 as 31 January 2026 falls on a Saturday.
3. Submission of scanned copy of the signed 2025 BIR Form 2316 of employees who qualified for substituted filing is due on 2 March 2026 as 28 February 2026 falls on a Saturday.

Substitute filing of BIR Form 1700

Qualification

Employees who meet the following conditions are no longer required to file an Annual Income Tax Return (BIR Form 1700):

1. Filipinos and resident aliens, including their working spouses, who are receiving purely compensation income from only one employer in the Philippines during the calendar year and whose total tax liability equals the taxes withheld from them.
2. Non-resident aliens not engaged in trade or business in the Philippines whose entire income have been subjected to final withholding tax.
3. An individual not engaged in the business or practice of profession, whose taxable income for the year does not exceed PHP250,000.

Exception

Substituted filing does not cover non-resident aliens not engaged in trade or business in the Philippines.

Exempt individuals

Overseas Contract Workers (OCWs) and Overseas Filipino Workers (OFWs) who work and derive income solely outside the Philippines are exempted from filing income tax returns and are subject to tax only on income derived from within the Philippines.

Reporting requirements

Employer requirements in relation to substituted filers
Coverage and deadline	Format	Important note
Mandatory for all employers, whether large taxpayers or non-large taxpayers. Submission of the BIR Forms 2316 of employees who qualified for substituted filing together with the required attachments shall be made on or before 28 February of the following year.	Mandatory submission of scanned copies of the original signed BIR Forms 2316 stored under prescribed modes in alphabetical order following the required naming convention using: Digital Versatile Disk Recordable (DVD-R) Universal Storage Bus (USB) memory stick or other similar storage devices Electronic Audited Financial Statement (eAFS) System	Submission of BIR Form 2316 without signature of those who qualified for substituted filing is no longer allowed.

Penalties for non-compliance

A compromise penalty of PHP1,000 shall be imposed for each failure to make, file, submit or keep any information returns, reports, sworn statements, certifications and other documents as required by the Tax Code. However, the aggregate amount to be imposed for all such failures shall not exceed PHP25,000 during a calendar year.

 

Fringe Benefit Tax (FBT)

Definition

A fringe benefit is any good, service or other benefit furnished or granted in cash or in kind by an employer to an employee (except rank-and-file employees), such as, but not limited to:

• Housing
• Expense account
• Vehicle
• Household personnel
• Interest on loan at less than 12% to the extent of the difference between 12% and the actual rate granted
• Holiday and vacation expenses
• Membership fees, dues and other expenses borne by the employer in social and athletic clubs or other similar organizations
• Life and health insurance and other non-life insurance premiums or similar amounts in excess of what the law allows
• Expenses of foreign travel
• Educational assistance

FBT calculation

FBT is a final withholding tax imposed on the grossed-up monetary value of the benefit. The grossed-up monetary value comprises the net value of the benefit received by the employee and the related tax due on the benefit shouldered and paid for by the employer on behalf of the employee. The regular FBT rate is 35% and the grossed-up rate is 65%. For non-resident aliens not engaged in trade or business, the FBT rate is 25% and the grossed-up rate is 75%.

Deadline

FBT is computed on a quarterly basis and remittance should be made on or before the last day of the month following the close of the calendar quarter using Quarterly Remittance Return of Final Income Taxes Withheld on Fringe Benefits Paid to Employees Other than Rank and File (BIR Form 1603Q).

Annual reporting deadline

The following shall be complied with by the employers on or before 31 January 2026:

1. Submission of 4th quarter BIR Form 1603Q both for manual and EFPS
2. Filing of the BIR Form 1604-F (Annual Information Return for Final Income Taxes Withheld), together with the supporting alphabetical list of employees
3. Distribution of BIR Form 2306 (Certificate of Final Tax Withheld at Source) to all employees, if applicable (may be issued prior to this date upon the payeeʼs request)

Reportorial requirements for equity-based compensation income

BIR reportorial requirements

Reportorial requirements of the BIR
Grant of equity-based compensation income	Vest or exercise of equity based-compensation income
Within 30 days from the grant of shares or options, employer shall submit to the concerned Revenue District Office (RDO) a statement under oath indicating the following: Terms and conditions of the plan Names, Taxpayer Identification Numbers (TINs) and positions of the grantees Book value, fair market value and par value of the shares on the date of grant Exercise price, exercise date and/or period Taxes paid on the grant, if any Amount paid for the grant, if any	On or before the 10th day of the month following the month of exercise, employer shall submit to the RDO a report stating the following: Exercise or vest date Names, TINs and positions of eligible employees Book value, fair market value and par value of the shares on the date of exercise Mode of settlement (i.e. cash, equity) Taxes withheld on the exercise, if any

Securities and Exchange Commission reportorial requirements

The following are the guidelines and reportorial requirements with the Philippine Securities and Exchange Commission (SEC):

Reportorial requirements of the SEC
Before any grant of equity-based compensation income	Annual compliance
Secure Certificate of Exemption, for share grants that are limited only to employees of the Company	On or before the 10th of January of each year following the date of the grant until full issuance, a report containing the necessary details of the grant, such as but not limited to, the names of the actual optionees and their corresponding number of shares

Other relevant issuances and updates

Securities and Exchange Commission (SEC)

The SEC issued Memorandum Circular No. 11, Series of 2025 on 9 September 2025, which introduces updated requirements for applications for exemption under Rule 10.2 of the Securities Regulation Code (SRC).

This includes the release of a revised version of SEC Form 10.2 in which all new and pending applications for exemption must now use this updated form.

The revised form reflects additional disclosures and formatting requirements aligned with the Circular, including:

• Detailed information on option shares and
• Updated corporate profiles of the issuer and its subsidiaries/affiliates
• Confirmation of compliance with SRC-IRR provisions for Independent

Bureau of Internal Revenue (BIR)

Increase in certain de minimis benefits

On 30 January 2025, the The Bureau of Internal Revenue (BIR) issued Revenue Regulation (RR) No. 4-2025 which further amends the de minimis benefits provisions under RR No. 2-98 (as previously amended). The regulation is effective on 14 February 2025, or 15 days from 30 January 2025. The changes include the following:

De Minimis Benefits	Previous rules (Train Law / RA 10963)	Updated rules RR No. 4-2025
Uniform/clothing allowance	Uniform and clothing allowance not exceeding ₱6,000 per annum (as amended by RR 11-2018)	Uniform and clothing allowance not exceeding ₱7,000 per annum
Employee achievement awards	Employee 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 ₱10,000 received by the employee under an established written plan which does not discriminate in favor of highly paid employees	Employee achievement awards, e.g., for length of service or safety achievement, in any form, whether in cash, gift certificate or any tangible personal property, with an annual monetary value not exceeding ₱10,000 received by the employee under an established written plan which does not discriminate in favor of highly paid employees

Requirement to submit attachments to the Annual Income Tax Return via the Electronic Audited Financial Statement (eAFS)

The Philippine Bureau of Internal Revenue (BIR) is now strictly implementing Revenue Memorandum Circular (RMC) No. 87-2024 in relation to the electronic filing of tax returns in the Philippines.

Thus, apart from the electronic filing of Annual Income Tax Returns (AITRs) through eBIR Forms Package Platform or EFPS, the BIR further mandates the electronic submission of the attachments thereto via the eAFS System or electronic Submission Facility, whichever is applicable.

While the actual filing due date of AITRs remains to be April 15th, taxpayers are given 15 days to submit the relevant attachments, i.e., until April 30th.

Read the full Alert here:

Capital Markets Efficiency and Promotion Act (CMEPA) key impact on individual taxpayers

The BIR has issued Revenue Memorandum Circular (RMC) No. 060-2025 circularizing Republic Act No. 12214 otherwise known as the Capital Markets Efficiency and Promotion Act (CMEPA) which took effect on 1 July 2025.

CMEPA brings more streamlined tax rules for passive income and investment activities. For individuals, this results in adjustments to the tax rates applicable to dividends, capital gains, interest, and royalties, along with new filing obligations for gains arising from shares that are not traded on an exchange. These updates call for close attention from taxpayers to ensure proper and timely reporting.

The following outlines the key differences between the previous tax regulations and the changes introduced under CMEPA.

Type of income	Previous rules (Before RA 12214)	Current rules (After RA 12214) Effective 1 July 2025
Gains from the sale, transfer or disposition of bonds	Sec. 32(B)(7)(g) provides that gains from the sale, exchange or retirement of bonds, debentures, or other debt instruments with a maturity of over five years are excluded from gross income.	Sec. 32(B)(7)(g) limits the exemption only to gains from specific bonds issued by the Philippine government or its instrumentalities to finance high-level priority programs.
Gains from Redemption of Mutual Funds / Unit Investment Trust Fund (UITFs)	Sec. 32(B)(7)(h) states that gains realized by the investor upon redemption of shares of stock in a mutual fund company, or units of participation in a unit investment trust fund, shall be exempt from income tax provided that the investment is held for a minimum period of five (5) years.	Sec. 32(B)(7)(h) now includes gains from the redemption of units of participation in a Mutual Fund or Unit Investment Trust Fund as an exclusion from gross income provided that prior to redemption, the underlying asset gains were already taxed or withheld.
Interest income	Sec. 27 (D)(1) states that peso deposits are subject to a 20% tax, while foreign currency deposits and pre-terminated long-term deposits are subject to a 15% tax (except non-resident aliens not engaged in trade or business, who are subject to a 25% final tax on all Philippines-sourced income).	Sec. 27 (D)(1) of the 2025 Tax Code states that interest income are subject to a final tax rate of 20% (except non-resident aliens not engaged in trade or business who are subject to 25% final tax on all Philippines-sourced income).
Royalty income	Sec. 24(B)(1) provides that the final tax of 20% shall apply on royalties, except on books, literary works and musical compositions which are subject to 10% final tax.	The royalty income is now presented under Sec24(B)5)
Capital gains from unlisted foreign shares	Sec. 27 (D)(5) of the 2021 Tax Code—Treated as ordinary income subject to graduated tax rates of 0%-35%	Sec. 27 (D)(4)of the 2025 Tax Code—Subject to a final tax rate of 15% capital gains tax similar to unlisted domestic shares
Sale of listed shares	Sec 127 (A) of the 2021 Tax Code subject to 0.6% Stock Transaction Tax (STT) on gross selling price of domestic shares listed and traded via the local stock exchange	Sec 127 (A) Subject to 0.1% STT for shares listed and traded via the local stock exchange and domestic shares listed and traded via foreign stock exchanges

Any tax exemption or preferential rate applicable to financial instruments issued or transacted before 1 July 2025 will continue to follow the tax rules in effect at the time of issuance for the remaining term of the agreement.

Implementation of Online Registration and Update System (ORUS) account registration for TIN applications

BIR is now mandatorily requiring the use of ORUS in the TIN application of the expatriates including foreign nationals registered under E.O. 98 as well as updates in the registration details of taxpayers.

Manual application of TIN will no longer be accepted (using BIR Form 1902 or 1904) going forward unless ORUS facility is inaccessible. ORUS was introduced by the BIR to the public in 2022. While this is so, the BIR has strictly implemented the use of ORUS, particularly in obtaining TIN for foreign nationals only in June 2025.

Relevant Issuances on ORUS:

• RMC 122-2022  requires taxpayers to update their registration information (especially official email address) using the Registration Update Sheet (RUS) as part of preparing for ORUS.
• RMC 153-2022 announces the official availability and initial rollout of the Online Registration and Update System (ORUS) and lists the services that can now be processed.
• RMC 121-2023 introduces new ORUS features, including TIN inquiry, Digital TIN ID, and additional online payment options.
• RMC No. 27-2024 provides an updated checklist of documentary requirements for all BIR registration-related services and stresses that only complete submissions will be processed.
• RMC 31-2024 – Clarifies that employers should no longer require manual TIN Verification slips from newly hired employees; verification must be done through ORUS or BIRʼs online tools.

Updated BIR registration forms

The BIR issued RMC No. 97-2025 to inform taxpayers and other concerned parties about the availability of the revised BIR Registration Forms (version as of October 2025).

The update aims to streamline the registration process, aligning it with the “Ease of Doing Business and Efficient Government Service Delivery Actˮ improvements.

RMC 97-2025 covers BIR Forms Nos. 1900 to 1906.

Forms	Description
BIR Form 1900	Application for Permit to Use Loose-Leaf Books of Accounts / Invoices / Other Accounting Records
BIR Form 1901	For self-employed individuals, professionals, mixed-income earners, non-resident aliens doing business, estates, trusts
BIR Form 1902	For individuals earning purely compensation income (employees)
BIR Form 1903	For corporations, partnerships (taxable / non-taxable), government agencies / LGUs, cooperatives, associations
BIR Form 1904	For one-time taxpayers / persons registering just to transact with the government (e.g. to get a TIN)
BIR Form 1905	For updating, correcting, or canceling registration information
BIR Form 1906	For applying for authority to print invoices

Updates on additional deduction from gross income for employersʼ contribution to Personal Equity and Retirement Account (PERA)

In a bid to increase participation in PERA, the BIR issued Revenue Regulations (RR) No. 22-2025 to amend RR No. 17-2011 and reflect the changes enacted under Republic Act No. 12214, or the CMEPA. The RR aims to align the existing tax rules with CMEPAʼs objective of boosting long-term savings and investments in the capital market and to incentivize private employers to support their employeesʼ PERA savings by offering generous tax deductions.

 

PERA contribution of employer	Before update	After update (effective 1 July 2025)
Employer deduction from gross income	100% of actual employer PERA contribution	100% of actual employer PERA contribution plus additional 50% of the amount contributed limited to the amount necessary to complete the maximum contribution of ₱200,000

Temporary suspension of all audit and other field operations

On 24 November 2025, RMC No. 107-2025 was issued by the BIR to suspend all audit and other field operations until lifted by the Commissioner of Internal Revenue (CIR), effective immediately. This includes the issuance of Letters of Authority (LOAs) and Mission Orders (MOs), in order to address concerns over audit practices and allow the Bureau to review and reform its audit systems.

The issuance of Assessment Notices, Warrants, and Seizure Notices will continue to maximize revenue collection.

Social Security System (SSS)

MySSS Card

The SSS launched the dual-function MySSS Card on 1 October 2025. This new card replaces the Unified Multi-Purpose Identification (UMID) card as the official SSS identification. In addition to serving as an ID, the MySSS Card also functions as a debit card through partner banks, allowing members to receive SSS benefits, loans, and other disbursements directly into the linked savings account.

The MySSS Card is available to all SSS members, pensioners, individual claimants, beneficiaries, and representative payees who meet the following requirements:

• Possess a permanent SSS number
• Have an active SSS Portal account with updated personal information, including local address, mobile number, and email
• Be registered with the Philippine Statistics Authority (PSA) under the National ID system (formerly the Philippine Identification System or PhilSys)

Suspension of the number coding system and branch servicing guidelines

The Social Security System (SSS) has issued Circular No. 2025-003 suspending the Number Coding System for walk-in transactions, following Proclamation No. 297 (lifting the COVID-19 public health emergency) and Social Security Commission (SSC) Resolution No. 88-s.2025. The suspension applies to all SSS branches nationwide, allowing members, employers, and stakeholders to visit any branch on any business day (Monday to Friday).

In the event of system downtime, branches may schedule appointments for those already waiting in line. As alternatives, members may

• file claims and applications online through the SSS Portal or SSS Mobile App
• wait for the system to come back online, or
• return on their preferred

Department of Labor and Employment (DOLE)

Increase in minimum wage in National Capital Region (NCR), CALABARZON (Region IV-A), Central Luzon (Region III), BARMM and SOCCSKSARGEN (Region XII)

For the year 2025, the following Wage Orders were issued providing an increase in the minimum wage rates in different regions of the country.

Issuance	Region	Effective date
Wage Order No. NCR-26	NCR	18 July 2025
Wage Order No. IVA-22	Calabarzon	5 October 2025 and 1 April 2026
Wage Order No. RB No. 26	Central Luzon	30 October 2025 and 16 April 2026
Wage Order No. BARMM-04	BARMM	17 July 2025
Wage Order No. RB XII-25	SOCCSKSARGEN or Region XII	02 November 2025 and 15 December 2025

The table below provides the updates on the minimum wage rates (MWR) in the National Capital Region (NCR), Central Luzon (Region III), Bangsamoro Autonomous Region in Muslim Mindanao (BARMM) Region and SOCCSKSARGEN Region (Region XII, comprises of Cotabato, Sarangani, South Cotabato, and Sultan Kudarat and General Santos City) during 2025. All amounts are in Philippine Peso (PHP).

NCR
Sector/Industry	Previous minimum wage rates	Allowance rate	New minimum wage rates (18 July 2025)
Non-agriculture	645	50	695
Agriculture (Plantation and Non-Plantation)	608		658
Service/Retail establishments employing 15 workers or less
Manufacturing establishments regularly employing less than 10 workers

 

Central Luzon (Provinces of Bataan, Bulacan, Nueva Ecija, Pampanga, Tarlac, Zambales)
Sector/Industry	Previous minimum wage rates	Wage increase	New minimum wage rates	Wage increase	New minimum wage rates
		1st tranche – 30 October 2025		2nd tranche – 16 April 2026
Non-agriculture	550	20	570	30	600
Agriculture	520		540		570
Retail/ Service	540		560		590

Central Luzon (Provinces of Aurora )
Sector/Industry	Previous minimum wage rates	Wage increase	New minimum wage rates	Wage increase	New minimum wage rates
		1st Tranche – 30 October 2025		2nd Tranche – 16 April 2026
Non-agriculture	500	30	530	30	560
Agriculture	485		515		545
Retail/ Service	435	40	475	40	515

 

CALABARZON Component cities and first-class municipalities)
Sector/Industry	Previous minimum wage rates	Wage increase	New minimum wage rates	Wage increase	New minimum wage rates
		1st Tranche – 5 October 2025		2nd Tranche – 1 April 2026
Non-agriculture	520 – 560	30 – 60	550 – 600	N/A	N/A
Agriculture	500	25	525	N/A	N/A
Retail/ Service Establishment Employing Not More Than 10 Workers	435	60	485	23	508

CALABARZON – Reclassified first-class municipalities per DOF DO No. 074-2024
Sector/ Industry	Previous minimum wage rates	Wage increase	New minimum wage rates	Wage increase	New minimum wage rates
		1st Tranche – 5 October 2025		2nd Tranche – 1 April 2026
Non-agriculture	450	60	510	40	550
Agriculture	425	60	485	40	525
Retail/ Service Establishment Employing Not More Than 10 Workers	435	60	485	23	508

 

CALABARZON – Second to fifth class municipalities
Sector/Industry	Previous minimum wage rates	Wage increase	New minimum wage rates	Wage increase	New minimum wage rates
		1st Tranche – 5 October 2025		2nd Tranche – 1 April 2026
Non-agriculture	450	60	510	15	525
Agriculture	425	60	485	23	508
Retail/ service establishment employing not more than 10 workers	435	60	485	23	508

 

BARMM
Area	Sector/Industry	Previous minimum wage rates	Allowance rate	New minimum wage rates (17 July 2025)
Cotabato City	Non-agriculture	361	50	411
	Agriculture	336		386
Maguindanao del Norte Maguindanao del Sur Lanao del Sur and Marawi CIty Basilan and Lamitan City Sulu Tawi-Tawi	Non-agriculture	336	50	386
	Agriculture	326		376
Special geographic area	Non-agriculture	341	50	391
	Agriculture	316		366

SOCCSKSARGEN
Sector/Industry	Previous minimum wage rates	Wage increase	New minimum wage rates	Wage increase	New minimum wage rates
		1st Tranche – 2 November 2025		2nd Tranche – 15 December 2025
Non-agriculture / Retail/ Service	430	20	450	10	460
Agriculture	410	23	433	10	443

Related impact in increase in minimum wage in NCR BARMM, Central Luzon (Region III), SOCCSKSARGEN (Region XII), and CALABARZON (Region IV-A)

The de minimis threshold for daily meal allowance for overtime work and night/graveyard shift is based on the regional basic minimum wage, which effectively remains at 25% of the daily minimum wage rate. Hence, the threshold of the de minimis overtime meal shall likewise increase based on the updated wage rates per region, as follows:

Region	Sector/Industry	New daily minimum wage rates	Daily OT meal threshold (25% of daily minimum wage rate)
NCR	Non-agriculture	695	173.75
	Agriculture	658	164.5
	Service/Retail establishments employing 15 workers or less
	Manufacturing establishments regularly employing less than 10 workers
CENTRAL LUZON	Non-agriculture	Until 15 April 2026: 530 or 570, depending on the area	Until 15 April 2026: 132.5 or 140, depending on the area
		Effective 16 April 2026: 560 or 600, depending on the area	Effective 16 April 2026: 140 or 150, depending on the area
	Agriculture	Until 15 April 2026: 515 or 540, depending on the area	Until 15 April 2026: 128.75 or 135, depending on the area
		Effective 16 April 2026: 545 or 570, depending on the area	Effective 16 April 2026: 136.25 or 142.5, depending on the area
	Retail/ Service	Until 15 April 2026: 475 or 560, depending on the area Effective 16 April 2026: 515 or 590, depending on the area	Until 15 April 2026: 118.75 or 140, depending on the area Effective 16 April 2026: 128.75 or 147.5, depending on the area
CALABARZON	Non-agriculture sector	Until 1 April 2026: 510 or 600, depending on the area Effective 1 April 2026: 525 or 550, depending on the area	Until 1 April 2026: 127.5 or 150, depending on the area Effective 1 April 2026: 131.25 or 137.5, depending on the area
	Agriculture sector	Until 1 April 2026: 485 or 525, depending on the area   Effective 1 April 2026: 508 or 525, depending on the area	Until 1 April 2026: 121.25 or 131.25, depending on the area   Effective 1 April 2026: 127 or 131.25, depending on the area
	Retail and service establishments employing not more than 10 workers upon full implementation of all tranches	Until 1 April 2026: 485   Effective 1 April 2026: 508	Until 1 April 2026: 121.25   Effective 1 April 2026: 127
BARMM	Non-agriculture	Effective 17 July 2025: 391-411	Effective 17 July 2025: 97.75-102.75
	Agriculture	Effective 17 July 2025: 366 – 386	Effective 17 July 2025: 91.5 – 96.5
SOCCSKSARGEN	Agriculture sector	Until 15 December 2026: 433 Until 15 December 2026: 443	Until 15 December 2026: 108.25 Until 15 December 2026: 110.75
	Service and Retail	Until 15 December 2026: 450 Until 15 December 2026: 460	Until 15 December 2026: 112.5 Until 15 December 2026: 115
All amounts are in Philippine Peso (PHP).

Ongoing proposals

The following proposed bills aim to provide relief to individual taxpayers by increasing their take home pay. These bills are yet to be discussed in the Bicameral Committee and have not yet been signed into law.

GINHAWA bill dated 30 July 2025

The GINHAWA Act under House Bill No. 2616 dated 30 July 2025 seeks to amend key provisions of the National Internal Revenue Code (NIRC) to provide tax relief for both salaried employees and self-employed individuals, ensuring that the country’s tax policies better reflect current economic conditions.

Below is a summary table highlighting the major proposed changes relative to current law.

Provision	Current tax law	Proposed under GINHAWA Act	Impact
Income tax exemption threshold	₱250,000 annual taxable income exempt	Increase exemption to ₱400,000	More individuals pay zero income tax; higher take-home pay
Maximum taxable income	₱8,000,000	₱12,800,000	Higher take home pay for higher income earner
Tax-exempt bonuses	Up to ₱90,000	Increase to ₱150,000	Higher tax-free bonuses
VAT-exempt threshold	₱3,000,000 gross sales/receipts	Increase to ₱4,000,000	Fewer small businesses required to pay VAT
FBT rate	35% of the grossed-up monetary value of the fringe benefit are paid by the employers for managerial/supervisory employees.	Certain benefits will no longer be taxed under FBT but will instead be added to the employeeʼs taxable salary and taxed under the regular graduated rates (0% to 35%).	Reduces employer costs and simplifies taxation of benefits

In addition, the measure outlines the following reforms:

• Lower the fringe benefit tax for managers and supervisors
• Exempt employer-paid insurance premiums from taxation
• Provide additional labor expense deductions for micro taxpayers
• Grant tax credits to businesses that offer discounts to PWDs, senior citizens, and solo parents
• Extend tax filing deadlines during calamities and emergencies
• Exempt micro taxpayers from withholding tax requirements
• Reduce taxes on life and health insurance premiums
• Remove the TIN requirement for cooperative members applying for tax exemptions

The Department of Finance (DOF) and BIR propose higher tax-exempt “De Minimisˮ benefits for workers

The DOF and the BIR have jointly proposed to increase the ceilings for tax-exempt de minimis benefits granted to employees.

The proposal seeks to update these limits in recognition of the rising cost of living, inflation, and the need to ease the financial burden on workers. This initiative supports the governmentʼs broader policy of providing tax relief to those who need it most while promoting fairness and inclusivity within the Philippine tax system.

Below is the summary of the proposed adjustments to tax-exempt “De Minimisˮ Benefits.

Type of benefit	Current ceiling	Proposed ceiling
Monetized unused vacation leave for private employees	10 days/year	12 days/year
Medical cash allowance to dependents	1,500/semester	2,000/semester
Rice subsidy	2,000/month	2,500/month
Uniform & clothing allowance	7,000/year	8,000/year
Medical assistance	10,000/year	12,000/year
Laundry allowance	300/month	400/month
Employee achievement awards	10,000/year	12,000/year
Christmas and anniversary gifts	5,000/year	6,000/year
Overtime/night shift meal allowance	25% of daily wage	30% of daily wage
CBA/productivity incentives	10,000/year	12,000/year

Senate Bill No. 1446 or “One‑month tax holiday of 2025ˮ dated 25 October 2025

This Senate Bill aims to provide immediate financial relief to Filipino workers. Under the bill, individual taxpayers receiving compensation income would be granted a one-time, one-month income tax exemption which would take effect starting the first payroll month immediately after the billʼs approval.

For earners with mixed income, only the portion derived from compensation would be exempt from income tax.

House Bill No. 6205 or “Three‑month tax holiday Act of 2025ˮ dated 19 November 2025

Under this bill, all individual taxpayers receiving compensation income would be eligible for a one‑time, three‑month exemption from income tax on compensation income, starting from the first payroll month following the billʼs approval.

For workers with mixed income, only the portion classified as compensation income would be exempt.

Additionally, the bill includes a “non‑diminution clauseˮ — employers would be barred from reducing, deferring, or withholding employee compensation or benefits during the tax holiday period.

For transparency and accountability, the bill mandates that the DOF, through the BIR, must submit a report within 60 days of implementation detailing foregone revenue and number of beneficiaries.

Contact us

For a deeper discussion on the above, please reach out to your Vialto Partners point of contact, or alternatively:

Geraldine Esguerra-Longa
Partner

Kent Lileo Tong
Director

Raymund Gutib
Director

Aniway Asi-Paragas
Senior Manager

Janeth Parcon-Ponce
Senior Manager

Mark Paul Gecha
Senior Manager

Nadine Chan-Sy
Senior Manager

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