De Minimis Benefits Remain to be Exempt under the TRAIN Law
De Minimis Benefits (DMB) are exempt from the fringe benefit tax and income tax shall, in general, be limited to facilities or privileges furnished or offered by an employer to his employees that are of relatively small value and are offered or furnished by the employer merely as a means of promoting the health, goodwill, contentment, or efficiency.
Grab a copy of the newly released title Tax Solutions on Employee Compensation and Benefits (under TRAIN Law), 2nd Edition 2019 by Atty. Villanueva
After the passage of the TRAIN Law (R.A. 10963) people were wondering if it remains to be exempt. On February 20, 2018, the BIR issued Revenue Regulation No. 8-2018 recognizing the tax exempt status of DMB.
RR 8-2018 mentions its exemption in its discussion of the remuneration as not among those constituting compensation income. It states that salaries, wages, emoluments and honoraria, allowances, commissions (e.g. transportation, representation, entertainment and the like); fees including director’s fees, if the director is, at the same time, an employee of the employer/corporation; taxable bonuses and fringe benefits, except those which are subject to the fringe benefits tax under Sec. 33 of the Code and the allowable “de minimis” benefits; taxable pensions and retirement pay; and other income of a similar nature constitute compensation income. (Sec. 2, RR 8-2018).
Related topic: Withholding Tax computation under the TRAIN Law
Learn more on statutory compensation and benefits in the book Guide on Employee Compensation and Benefits Volume 2
The DMB list was amended and made exclusive by RR 5-2011. Additional P10,000 annual benefit was added by RR 1-2015.
AMENDED LIST OF DMB AS OF LAST AMENDMENT BY RR 1-2015
(1) Monetized unused vacation leave credits of employees not exceeding ten (10) days during the year;
(2) Medical cash allowance to dependents of employees not exceeding P750 per semester or P125 per month;
(4)Uniform and Clothing allowance not exceeding P5,000.00 per annum;
(5) Actual medical assistance e.g. medical allowance to cover medical and healthcare needs, annual medical/executive check-up, maternity assistance, and routine consultations, not exceeding P10,000.00 per annum.
(6) Laundry allowance of P300 per month;
(7) Employees achievements 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 P10,000 received by the employee under an established written plan which does not discriminate in favor of highly paid employees;
(8)Christmas gifts not exceeding P5,000.00 per employee per annum;
(9)Daily meal allowance for overtime work and night/graveyard shift not exceeding twenty-five percent (25%) of the basic minimum wage on a per region basis; and
(10) Benefits received by an employee by virtue of a collective bargaining agreement (CBA) and productivity incentive schemes provided that the total annual monetary value received from both CBA and productivity incentive schemes do not exceed ten thousand pesos (PhP10,000.00) per employee per taxable year.
May 2018 DMB Update: De Minimis Benefits (Certain Items) Increased under RR 11-2018
The amount of “De Minimis” Benefits conforming to the ceiling herein prescribed shall not be considered in determining the P30,000 (now P90,000 per RA 10963) ceiling of “other benefits” under Section 32(b)(7)(e) of the Code.
However, if the employer pays more than the ceiling prescribed by these regulations, the excess shall be taxable to the employee receiving the benefits only if such excess is beyond the P30,000.00 (now P90,000 per RA 10963) ceiling. (RR 10-2008).
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