"De Minimis Benefits" as per Revenue regulation No. 8-2012

The Bureau of Internal Revenue has issued Revenue Regulation No. 8-2012 for further amendments to Revenue Regulations Nos. 2-98 and 3-98, as last amended by Revenue Regulation Nos. 5-2008 and 5-2011, with respect to “De Minimis Benefits” which took effect last January 1, 2012.

In this regulation, an amendment of Uniforms given to employees by the employer not exceeding P5,000 per annum (previously not exceeding P4,000 per annum) is effective January 1, 2012.

“De Minimis Benefits” are 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 of his employees.

In fact, the following shall be considered “De Minimis” benefits not subject to income tax and withholding tax of both managerial and rank and file employees: 

1. Monetized unused vacation leave credits of employees not exceeding “10 days” during the year and the monetized value of leave credits paid to government officials and employees.
2. Medical cash allowance to dependents of employees not exceeding P750 per semester or P125 a month.
3. Rice subsidy of not more than P1,500 per month or 1 sack (50 kg.) rice per month.
4. Uniforms given to employees by the employer not exceeding P5,000 per annum (RR 8-2012 effective January 1, 2012).
5. Actual medical benefits given to employees by the employer not exceeding P10,000 per annum.
6. Laundry allowance not exceeding P300 per month.
7. Employees achievement awards (e. g. for length of service or safety achievement, which must be in the form of a tangible personal property other than cash or gift certificate with and annual monetary value not exceeding P10,000 under an established written plan which does not discriminate in favour of highly paid employees).
8. Gifts given during Christmas and major anniversary celebrations not exceeding P5,000 per employee per annum. (deleted: amounts provided to guests).
9. Daily meal allowance for overtime work not exceeding 25% of daily basic minimum wage.

• The amount of de minimis benefits conforming to the ceiling herein shall not be considered in determining the P30,000 ceiling of other benefits excluded from the gross income under Section 32 (7)€ of the Code.

• Allowances which are fixed in amounts and are regularly received by the employee as part of his monthly compensation income shall not be treated as taxable fringe benefit but as compensation income.

• The Minimum Wage Earner receiving “other benefits” exceeding the P30,000 limit shall be taxable on the “excess benefit”, as well as on his salaries, wages and allowances, just like an employee receiving compensation income beyond the Statutory Minimum Wage.

• Minimum Wage Earner receiving “other income”, such as income from the conduct of trade, business, or practice of profession, except income subject to final tax, in addition to compensation income, are not exempt from income tax on the entire income earned during the taxable year.