Workers’ de minimis benefits exempted from taxes

MANILA, Philippines - Benefits of workers from a collective bargaining agreement (CBA) and company productivity incentive schemes are now exempted from taxes.

The Bureau of Internal Revenue (BIR) has issued Revenue Regulation No. 1-2015 exempting from withholding taxes workers’ benefits under CBA and productivity incentive schemes as long as the total annual monetary value received does not exceed P10,000 per worker per taxable year.

The new rules also exempt cash benefits from the payment of fringe benefit tax provided that the amount is not higher than P10,000 per employee per year.

Labor Secretary Rosalinda Baldoz said the expansion of the tax-exempt privilege is a direct result of exhaustive social dialogue between President Aquino and various labor groups last year.

The total amount of tax exemption that each taxpayer can claim will reach up to P104,225 from P94,225, she added.

However, the government stands to lose P16.9 billion in revenues.

Finance Secretary Cesar Purisima said the government believes in balanced proposals to augment the strength of the economy.

“We believe that the expansion of tax-exempt de minimis benefits is fairer and more equitable than other measures of tax relief benefiting only a small percentage of the working population,” he said.

“This measure directly impacts the working poor and the smallest income earners, who stand to have the most to gain from these benefits. We came to this agreement after a thorough consideration: we think this is a win for all Filipinos.”