Revenue Regulations (RR) No. 4-2025 introduces amendments to relevant provisions with respect to existing tax-exempt “De Minimis” benefits, which is deemed to apply effective calendar year 2025.
1. Uniform and clothing allowance: Higher tax-exempt ceiling
Then: Php6,000 per year
Now: Php7,000 per year
2. Employee achievement awards: Inclusion of cash awards
Then: The tax-exempt ceiling of Php10,000 per year applies only to awards given in the form of a tangible personal property
Now: The non-taxable threshold of Php10,000 per year covers awards given in any form, whether in cash, gift certificate or any tangible, personal property.
“De minimis” benefits pertain to facilities or privileges that are of relatively small value and are offered or furnished by the employer to their employees merely as a means of promoting the health, goodwill, contentment, or efficiency of the employees. These are considered not subject to both income tax and consequently withholding tax on compensation (WTC) as well as fringe benefit tax (FBT).
The list of “De Minimis” benefits are exclusive, and subject to limits. Any excess of the prescribed threshold may be aggregated with the employee’s 13th month pay, bonuses and incentives, in determining the yearly PHP90,000 tax-exempt threshold, if not yet exhausted. Any further excess shall be subject to withholding tax on compensation (WTC) or fringe benefit tax (FBT), as applicable.
For a deeper discussion on the above, please reach out to your Vialto Partners point of contact, or alternatively:
Geraldine Esguerra-Longa
Tax Partner
Raymund Gutib
Tax Director
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