1. SPECIAL TREATMENT OF FRINGE BENEFITS
Presented by:
SUSAN D. TUSOY
Asst. Chief, Assessment Division
RR 19-Davao City

2. Legal Basis: Sec. 33 of the Tax Code RR 2-98 RR 3-98 RR 8-2000
RMC

3. Imposition of Tax
A final tax of 32% effective Jan. 1, 2000 on the grossed-up monetary value of fringe benefit furnished or granted to the employee (except rank and file employees) by the employer (whether an individual or a corporation)

4. Grossed-Up Monetary Value (GMV)
Shall be determined by dividing the monetary value of the FB by 68% (effective Jan. 1, 2000);
It represents the whole amount of income realized by the employee which includes the net amount of money or the net monetary value of the property plus the amount of tax otherwise due from the employee but paid by the employer.

5. Illustration
ABC Co. provides housing allowance to its manager at P6,800 per quarter.
FBT is computed as follows:
GMV = (P6,800 / 68%) = P10,000
FBT = GMV x 32%
= (P10,000 x 32%)
= p3,200.00
Summary
Given to employee - P 6,800
Paid to BIR ,200
Fringe Benefit Expense - P10,000

6. Exception
If the fringe benefits are required by the nature of or necessary to the trade, business or profession of the employer, or when the fringe benefit is required by the nature of, or necessary to the trade, business or profession of the employer or when it is for the convenience or advantage of the employer.

7. Fringe Benefits defined
means any good, service or other benefit furnished or granted in cash or in kind by an employer to an individual employee (except rank and file employees), such as, but not limited to the following:

8. Fringe Benefits Housing; Expense Account; Vehicle of any kind;
Household personnel, such as maid, driver and others
Interest on loan at less than market rate to the extent of the difference between the market rate and actual rate granted;

9. Fringe Benefits (cont..)
(6) Membership fees, dues and other expenses borne by
the employer for the employee in social and athletic /
clubs or other similar organizations;
(7) Expenses for foreign travel;
(8) Holiday and vacation expenses;
Educational assistance to the employee or his
dependents; and
(10) Life or health insurance and other non-life insurance
premiums or similar amounts in excess of what the law
allows.

10. Fringe Benefits Not Subject to Fringe Benefits Tax
FB which are authorized and exempted from income tax under the Code or under any special law
Contributions of the employer for the benefit of the employee to retirement, insurance and hospitalization benefit plans;
Benefits given to the rank and file, whether granted under a collective bargaining agreement or not;

11. Fringe Benefits Not Subject to Fringe Benefits Tax
4. “De minimis” benefits
5. If the grant of fringe benefits to the employee is required by the nature of, or necessary to the trade, business or profession of the employer; or
6. If the grant of the fringe benefits is for the convenience of the employer.

12. DE MINIMIS BENEFITS (as amended by RR 5-2011)
a) Monetized unused vacation leave credits of employees
not exceeding 10 days during the year
b) Monetized value of vacation and sick leave leave credits paid to government officials and employees
c) Medical cash allowance to dependents
Not exceeding P750/employee/semester or P125/month

13. DE MINIMIS BENEFITS
d) Rice subsidy of P1,500 or 1 sack of 50 kg rice per month amounting to not more than P 1,500.
e.) Uniform and clothing allowance not exceeding
P4,000/ annum
f.) 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 per annum (RR )
(Previous: Actual yearly medical benefits not exceeding
P10,000/annum).

14. DE MINIMIS BENEFITS Laundry allowance not exceeding P 300.00/ month
Employees achievement awards in the form of tangible personal property other than cash or gift certificate with annual value not exceeding P10,000 under established written plan which does not discriminate in favor of highly paid employees;

15. DE MINIMIS BENEFITS
i.) Gifts given during Christmas and major anniversary celebrations not exceeding P5,000/annum/employee
j.) Daily meal allowance for overtime work and night/graveyard shift not to exceed 25% of the basic minimum wage on a per region basis (RR )
(previous: daily meal allowance for overtime work not exceeding 25% of the basic minimum wage) .

16. DE MINIMIS BENEFITS Deleted provision under RR 5-2011
flowers, fruits, books, or similar items given to employer under special circumstances, e.g., on account of illness, marriage, birth of a baby, etc.

17. DE MINIMIS BENEFITS
All other benefits given by employers which are not included in the above enumeration shall not be considered as “de minimis” benefits, and hence, shall be subject to:
Income tax / WT on Compensation for rank
and file employees and
Fringe benefit tax for supervisory and
managerial positions

18. DE MINIMIS Rules
“DE MINIMIS BENEFITS” conforming to the ceiling shall not be considered in determining the P 30,000
the excess over the respective ceilings shall be considered as part of the “other benefits” and the employee receiving it will be subject to tax only on the excess over the P30,000.

19. Manner of Payment The tax imposed is payable by the employer
Manual Filing / payment
Due date is on or before the 10th day of the month following the quarter in which the withholding was made
EFPS Filing/ePayment
Due date is on or before the fifteenth (15th) day of the month following the quarter in which the withholding was made
Use BIR FORM 1603

20. The end