Sunday, July 18, 2010

Electronic Letter of Authority as per RMO 62-2010

Revenue Memorandum Order No. 62-2010 prescribes the supplemental guidelines on the electronic issuance of Letters of Authority (LA) and related audit policies and procedures.

A very important provision that taxpayers need to know is under point #6... Taxpayers who are in possession of manually prepared LAs/TVNs shall not entertain any Revenue Officer relative to the audit of his internal revenue taxes for the taxable year 2009 unless replaced with an eLA.


How does an eLA look like?  Funny as it is, the examiners are ignorant themselves how it looks.  As prescribed under point#8 same type of paper being used in printing of Certificate of Registration will be used.  As of the moment, it will look like a plain sheet of paper unlike the usual LA.  

What the RDOs are doing now, is issuing LAs and backdating them to June 25; nevertheless, it does not excuse them from complying with the above RMO.

Download full text here:
ftp://ftp.bir.gov.ph/webadmin1/pdf/52266RMO%2062-2010.pdf

Duties and Responsibilities of SSS Members

What are the duties and responsibilities of SSS employee-members?An SSS member should:
  1. secure their SS numbers;
  2. ensure that they are reported for coverage under the SSS by their employers;
  3. pay their monthly share of contributions and ensure that these contributions are remitted to the SSS by their employers;
  4. ensure that SSS Form R3’s (Contributions Collection Lists) where their name are included, are submitted to the SSS by their employers;
  5. pay their monthly loan amortization, if any, thru salary deduction and to ensure that these payments are remitted to the SSS by their employers;
  6. update or correct their personal records with the SSS by submitting a duly filled-up SSS Form E-4 (Member’s Data Amendment) and supporting document/s to avoid delays in the processing of benefit claims; and
  7. be conscious of changes and improvements in SSS policies and benefit structure.
What are the duties and responsibilities of an SSS employer-member?
An employer is obliged to:
  1. require the presentation of the SS number of a prospective employee;
  2. report all employees for SS coverage within thirty (30) days from the date of employment by submitting an accomplished SSS Form R-1A (Employment Report ) at the nearest SSS office;
  3. deduct from the employees the monthly SS contributions based on the schedule of contributions; pay their share of contributions including Employees’ Compensation (EC) and remit these contributions to the SSS or accredited banks within the first the (10) calendar days following the month when said contributions are due and applicable.
  4. Submit a summary of all employees’ contributions thru SSS Form R-3’s (Contribution Collection List) together with a copy of the Special Bank Receipt (SBR) and SSS Form R-5 ( Payment Return Form) within 10 days after the applicable quarter;

    An employer may also participate in the SSSNet, a computer service using the electronic data interchange technology, designed to hasten the posting of employees contributions for faster processing and availment of benefits and loan privileges.

    Or, the employer may opt to participate in the R3 Tape/Diskette Project which allows the submission of the monthly summary of employees’ contribution thru a computer tape or diskette. This system is a better alternative to manual reporting as its minimizes encoding errors and processing time.
  5. issue official receipts and maintain official records of employment and deductions for all contributions subtracted from their employees every month or indicate such deductions from the employees’ pay envelopes;

    A household employer should submit an accomplished SSS Form R-3 (Contributions Collection List) and indicate in the appropriate box as a household employer. Submit this together with the SSS Form R5’s at the nearest SSS office. Household employers may enroll in the Auto-Debit Arrangement System which allows the one-time enrollment of the employer’s bank account for the automatic payment of monthly SSS contributions and loan repayments. This arrangement is open at the United Coconut Planters Bank, Equitable-PCI Bank, Bank of the Philippine Islands, Metropolitan Bank and Trust Co., Philippine National Bank; Asia Trust Bank; Philippine Savings Bank; Development Bank of the Philippines; and more bank soon.
  6. remit to the SSS all salary, educational, stocks investment or privatization loan amortization of their employees and submit an accomplished SSS Form ML-1 (Monthly Salary/Calamity/Emergency/Stock Investment Loan Payment Return) to any of the SSS accredited banks within the first ten (10) calendar days following the month when said amortizations are due and applicable;

  7. submit a summary of all employees’ loan amortization thru an accomplished SSS Form ML-2 (Collection List) with copies of the SBRs and SSS Form ML-1 on or before the tenth day following the applicable month to the nearest branch;

    An employer may also participate in the Salary Loan Repayment Tape/Diskette project which allows the submission of the monthly summary of employees’ loan repayment thru a computer tape or diskette. This system provides employers with convenience and hastens the posting of member’s loan repayments.

  8. advance SS and EC sickness benefits due their employees once these are approved by the SSS;

  9. advance SS maternity benefits due to qualified female employees;

  10. file for reimbursement for all legally advanced sickness and maternity benefits;

  11. keep their employees updated on the changes in SSS policies and increases in their benefits;

  12. ensure that all forms submitted are properly and accurately accomplished;

  13. inform SSS of any change in company address, business name or temporary/permanent cessation of business operations through the submission of a duly notarized SSS Form R-8 ( Employer Data Change Request);

  14. submit annually an updated SSS Form L-501 (Specimen Signature Card); and,

  15. certify SSS-related documents for the employees when required for purposes of their claims.

What are the duties and responsibilities of a voluntary/self-employed member?
Self-employed/voluntary members should:
  1. pay their monthly contributions using SSS Form RS-5 (Contributions Payment Return Form) monthly in accordance with the prescribed schedule;

    Beginning 01 January 2004, self-employed and voluntary members, including OFWs may change their MSC monthly. The change may be by one or two salary brackets without requiring the submission of documents to prove their earnings. In case the change will result to an MSC of lower than P5, 000.00, or where the change will result to more than the present MSC, a Declaration of Earnings must be submitted to support the new earnings. However, if the age of the member is 55 years or older and the present MSC is more than P10, 000.00, the allowed increase is only one salary bracket regardless of whether the supporting documents are submitted or not.

    For Overseas Filipino Workers (OFWs), the minimum MSC was increased from P3, 000.00 to P5, 000.00, or beginning 01 January 2004

  2. update or correct their personal records with the SSS by submitting a duly filled-up SSS Form E-4 (Member’s Data Amendment) with supporting documents.

  3. be conscious of changes and improvements in SSS policies and benefit structure.

    Self-employed and voluntary members may enroll in the Auto-Debit Arrangement System which allows the one-time enrollment of the employer’s bank account for the automatic payment of monthly SSS contributions and loan repayments. This arrangement is open at the United Coconut Planters Bank, Equitable/PCI Bank, Bank of the Philippine Islands, Metropolitan Bank and Trust Co., Philippine National Bank, Asia Trust Bank, Philippine Savings Bank, Development Bank of the Philippines; and more banks soon.

SSS Sickness Benefits - Frequently Asked Questions

What is the sickness benefit?

The sickness benefit is a daily cash allowance paid for the number of days a member is unable to work due to sickness or injury.

How does an SSS member qualify for the sickness benefit?

A member is qualified to avail of this benefit if:
  1. unable to work due to sickness or injury and confined either in a hospital or at home for at least four days;
  2. at least three months of contributions within the 12 month period immediately before the semester of sickness has been paid;
  3. all company sick leaves with pay for the current year has been used up;
  4. the employer has been notified, or, if a separated, voluntary or self-employed member, the SSS directly.
How much sickness benefit is a member entitled to receive?
The amount of a member’s sickness benefit per day is equivalent to ninety percent (90%) of the member’s average daily salary credit.
How is the sickness benefit computed?
  1. Exclude the semester of sickness.

        A semester refers to two consecutive quarters ending in the quarter of sickness.
        A quarter refers to three consecutive months ending March, June, September or December.
  2. Count 12 months backwards starting from the month immediately before the semester of sickness.
  3. Identify the six highest monthly salary credits within the 12-month period.
    Monthly salary credit means the compensation base for contributions and benefits related to the total earnings for the month. (The maximum covered earnings or compensation is P15,000 effective Jan 1, 2002).
    Please refer to the following table:
    Range of
    Compensation
    Monthly
    Salary Credit
    1,000 - 1,249.99 1,000
    1,250 - 1,749.99 1,500
    1,750 - 2,249.99 2,000
    2,250 - 2,749.99 2,500
    2,750 - 3,249.99 3,000
    3,250 - 3,749.99 3,500
    3,750 - 4,249.99 4,000
    4,250 - 4,749.99 4,500
    4,750 - 5,249.99 5,000
    5,250 - 5,749.99 5,500
    5,750 - 6,249.99 6,000
    6,250 - 6,749.99 6,500
    6,750 - 7,249.99 7,000
    7,250 - 7,749.99 7,500
    7,750 - 8,249.99 8,000
    8,250 - 8,749.99 8,500
    8,750 - 9,249.99 9,000
    9,250 - 9,749.99 9,500
    9,750 - 10,249.99 10,000
    10,250 - 10,749.99 10,500
    10,750 - 11,249.99 11,000
    11,250 - 11,749.99 11,500
    11,750 - 12,249.99 12,000
    12,250 - 12,749.99 12,500
    12,750 - 13,249.99 13,000
    13,250 - 13,749.99 13,500
    13,750 - 14,249.99 14,000
    14,250 - 14,749.99 14,500
    14,750 - O V E R 15,000


  4. Add the six highest monthly salary credits to get the total monthly salary credit.
  5. Divide the total monthly salary credits by 180 days to get the average daily salary credit.
  6. Multiply the average daily salary credit by 90 percent to get the daily sickness allowance.
  7. Multiply the daily sickness allowance by approved number of days to arrive at the amount of benefit due.
For example, let us say that an SSS member gets sick or injured in October 2004 for 20 days:
  1. The semester of sickness would be from July 2004 to December 2004.
  2. The 12-month period would be from July 2003 to June 2004 within which the six highest monthly salary credits will be chosen.
  3. Let us assume that the six highest monthly salary credits are P15, 000 each. The total monthly credit would be P90, 000 (P15, 000 x 6).
  4. The total monthly salary would be divided by 180 to get the average daily salary credit or P500 (P90, 000/180).
  5. The sickness benefit due is P9,000 (P450 x 20 days).
How many days in a year can a member avail himself of the sickness benefit?
A member can be granted sickness benefit for a maximum of 120 days in one calendar year. Any unused portion of the allowable 120 days sickness benefit cannot be carried forward and added to the total number of allowed compensable days for the following year.
The sickness benefit shall not be paid for more than 240 days on account of the same illness. If the sickness or injury still persists after 240 days, his claim will be considered a disability claim.
Who should an employee notify regarding his sickness or injury?
A member should notify the employer within five (5) calendar days after the start of sickness or injury. The employer, in turn, must notify the SSS of the confinement within (5) calendar days after receipt of the notification from the employee member.
Notification to the employer is not necessary if the member’s confinement is in a hospital or if the member got sick or was injured while working or was within the company premises. In this case, the employer must notify the SSS within five (5) calendar days from the start of the employee’s sickness or injury while working or was within the company premises.
What is the procedure for notification for unemployed, self-employed and voluntary members?
Unemployed, self-employed or voluntary paying members should notify the SSS directly within five (5) calendar days after the start of confinement, unless such confinement is in the hospital,in which case, notification is not necessary.
What are the effects of failure or delay in notification?
  1. If the employee notifies the employer, or the SSS, in the case of an unemployed, self-employed or voluntary paying member, beyond the prescribed five-day period, the confinement shall be deemed to have started not earlier than the fifth day immediately preceding the date of notification.
  2. If the employer notifies the SSS beyond the five (5) calendar days after the receipt of the notification from the employee, the employer shall be reimbursed only for each day of confinement starting from the 10th calendar day immediately preceding the date of notification to the SSS.
  3. If the employee has given the required notification to the employer, but the employer fails to notify the SSS of the confinement within the prescribed period resulting in the reduction of the benefit or denial of the claim, the employer shall have no right to recover the daily sickness allowance advanced to the employee.

SSS Emergency Loan - Frequently Asked Questions

What is an EC emergency loan?
It is a loan granted to workers in the private sector who were separated from employment as a result of the currency crisis.
Who may qualify for an emergency loan?
  1. A member who has been separated from employment not earlier than 01 July 1997 due to mass lay-off, or who has been temporarily separated or retrenched following the suspension of his firm's operation due to the currency crisis.

    A member who has not been laid off but whose income or wages have been effectively reduced due to job rotation or reduced working hours is also qualified.

  2. He has paid and remitted at least six monthly contributions prior to the semester of separation or temporary lay-off from employment or depletion of income.

  3. He has not yet been granted a refund of contributions, retirement or total permanent disability benefits.

  4. He must be up-to-date in the payment of all member loan obligations, including the following, prior to his separation from employment:


    salary loan

    calamity loan

    educational loan

    emergency loan

    stock investment loan

    privatization fund loan

    special educational loan for vocational and technical students

    special educational loan for Y2K conversion training

    member assistance for the development of entrepreneurship (MADE), and

    housing loan granted through the SSS, National Home Mortgage Finance Corporation (NHMFC) and Home Development Mutual Fund (Pag-IBIG).


  5. He has no outstanding balance on any previous emergency loan granted by the Employees' Compensation Commission (ECC).

  6. He has not been disqualified by the Social Security Commission (SSC) for having filed a fraudulent loan application with the SSS.
How much is the loanable amount?
An emergency loan is equivalent to twice the member-borrower's latest monthly salary credit posted in the SSS master file, but not to exceed P12,500.
How much is the interest charged on an emergency loan?
An emergency loan is charged an interest of six per cent a year, deductible in advance.
What is meant by monthly salary credit?
The monthly salary credit is the basis of the computation of benefits and loans (Please see the schedule of contributions).
In case a loan is not paid, how much is the delinquency interest?
Any balance of the loan not paid on time will be charged an interest of one per cent a month until it is fully paid.

SSS Salary Loan - Frequently Asked Questions

What is a salary loan?
It is a loan intended to meet a member's short-termcredit needs.
Who may qualify for a salary loan?
  1. An employed, currently paying self-employed or voluntary member (SE/VM) who has 6 posted monthly contributions for the last 12 months prior to the month of filing of application.
    • For one-month loan, the member-borrower must have 36 posted monthly contributions prior to the month of  filing of application.
    • For a two-month loan, the member-borrower must have 72 posted monthly contributions prior to the month of filing of application.
  2. If the member-borrower is employed, the employer must be updated in contributions and loan remittances.
  3. The member-borrower must be updated-current in the payment of other member loans, which include educational, stock investment, MADE & housing loans granted under the Unified Housing Loan program (UHLP) or direct from SSS.
  4. The member-borrower has not been granted final benefit (total permanent disability, retirement and death).
  5. The member-borrower has not been disqualified due to fraud committed against the SSS.
How much is the loanable amount?
A one-month salary loan is equivalent to the average of the member’s latest 12 monthly credits posted.
A two-month salary loan is equivalent to twice the average of the member’s latest 12 monthly salary credits posted (rounded to the next higher monthly salary credit), but not to exceed P24,000.
How long will it take the member to pay back the loan?
The one-month or two-month salary loan shall be payable within two (2) years in 24 equal monthly installments.
How much is the interest charged on a salary loan?
The loan shall be charged a nominal interest of 10% per annum. First year’s interest shall be deducted in advance from the proceeds of the loan. Second year’s interest shall be included in the monthly amortizations.
In case a loan is not paid, how much is the delinquency interest?
Loan amortization not remitted on due date shall bear a penalty of 1% per month.
Is there a service fee?
Yes. A service fee of 1% of the loan amount shall be charged and deducted from the proceeds of the loan.
When can a member renew a salary loan with the SSS?
The loan may be renewed after the prescribed amortization period of two (2) years. Balance of P500 or less shall be deducted from the proceeds of the new loan.
How does a member pay back the loan?
For employed member-borrower (including participants of the fast track program), the first deduction from their salaries shall start on the second month following the date of loan. All remittances shall be made on or before the 10th day following the applicable month of deduction to the SSS or to any of its authorized banks.
The employee is obliged to report to the new employer his obligations with SSS and shall allow the new employer to deduct from his salary the corresponding amortizations due, plus any penalty for late remittance of amortizations.
For self-employed or voluntary paying member-borrowers, the first amortization shall be paid to the SSS or any of its authorized banks on or before the 10th day of the third month following the date of loan.
What are the obligations of the employer to the SSS?
The employer shall be responsible for the collection and remittance to the SSS of the amortization(s) due on the member-borrower’s salary loan through payroll deduction.
The employer shall require new employees to secure from the SSS an updated statement of account.
The new employer shall continue the deduction and shall be accountable for remittance to the SSS.
In case of transfer, separation, or resignation, how can a borrower pay back the loan?
In case a member-borrower is separated voluntarily, (e.g. retirement or resignation) or involuntarily, (e.g. termination of employment or cessation of operations of the company), the employer shall be required to deduct the total balance of the loan from any benefit(s) due to the employee and shall remit the same in full to SSS.
If the benefit(s) due the employee or the amount thereof legally available for offset of obligations of the employee is insufficient to fully repay the loan, the employer shall report the unpaid loan balance to SSS.
In case of member-borrower’s death, total disability or retirement, what happens to the unpaid loan?
In case of member’s’s death, total disability or retirement under the Social Security Act, the entire amount or any unpaid amount of the loan as well as the interest and penalty thereon, If any,shall be deducted from the corresponding benefit.
An employed member shall submitan accomplished SSS Form ISL-101 (Member Loan Application Revised March 2004) and present the digitized SSS ID cards or E-6 acknowledgement stub with 2 (2) IDs listed below one of which with recent photo and date of birth.
A self-employed, voluntary member, overseas worker, non-working spouse, farmer or fisherfolk and house hold-helper shall submit an accomplished SSS Form ISL-101 and present the digitized ID card or E-6 acknowledgement stub with any two (2) of the following valid IDs,one of which with recent photo and date of birth.
•    Unexpired Driver’s License
•    Professional Regulation Commission (PRC) ID Card
•    Passport
•    Postal ID
•    School or Company ID
•    Tax Identification Number Card (TIN)
Where can a borrower file the salary loan application?
A borrower may file the salary loan application at the nearest SSS branch or representative office.
NOTE: The employer shall submit annually an updated SSS Form L-501 (Specimen Signature Card) to avoid delay in the processing of salary loan applications.

Wednesday, February 3, 2010

Characteristics of a Valid Letter of Protest on BIR Tax Assessment

If a Taxpayer does not agree with the assessment made following an audit, a Taxpayer has the right to contest an assessment, and may do so by filing a letter of protest stating in detail his reasons for contesting the assessment.

It is filed within thirty (30) days from the Taxpayer’s receipt of the Notice of Assessment and formal Letter of Demand.  The taxpayer shall submit the required documents in support of his protest within sixty (60) days from date of filing of his letter of protest, otherwise, the assessment shall become final, executory and demandable.

A protest is considered valid if it satisfies the following conditions:

It is made in writing, and addressed to the Commissioner of Internal Revenue;

It contains the information, and complies with the conditions required by Sec. 6 of Revenue Regulations No. 12-85; to wit:
a.) Name of the taxpayer and address for the immediate past three (3) taxable year.
b.) Nature of request whether reinvestigation or reconsideration specifying newly discovered evidence he intends to present if it is a request for investigation.
c.) The taxable periods covered.
d.) Assessment number.
e.) Date of receipt of assessment notice or letter of demand.
f.) Itemized statement of the findings to which the taxpayer agrees as a basis for computing the tax due, which amount should be paid immediately upon the filing of the protest. For this purpose, the protest shall not be deemed validly filed unless payment of the agreed portion of the tax is paid first.
g.) The itemized schedule of the adjustments with which the taxpayer does not agree.
h.) A statement of facts and/or law in support of the protest.

It is important that the taxpayer shall state the facts, applicable law, rules and regulations or jurisprudence on which his protest is based, otherwise, his protest shall be considered void and without force and effect on the event the letter of protest submitted by the taxpayer is accepted.

Monday, January 18, 2010

Year End Tax Reminders

Here are some tax reminders for the year ending 2009 and the coming year 2010:
  • Registration of Manual Books of Accounts.
Taxpayers using manual books of accounts are required to register their books before using it. Manual books of accounts that are intended for use in 2010 should be registered with the BIR on or before December 31, 2009.

However, the BIR simplified its rules when they issued Revenue Memorandum Circular (RMC) No. 82-2008. Under the said regulations, manual books that have been registered by a taxpayer but have not yet been fully utilized can still be used in the succeeding years without the need for re-stamping.

The only requirement is to label the pages applicable to a particular period for proper monitoring. In other words, a new set of books shall be registered only when the previously registered books have been fully utilized. Therefore, taxpayers are not required to register a new set of books every year.

  • Payment of Registration Fees of P500

  • Annualization of Withholding Taxes of Employees. This process involves the preparation of the:

- monthly withholding tax return (BIR Form 1601-C) for December which is due on January 15, 2010 for manual filers or on January 12 to 15 for those under the Electronic Filing and Payment System (EFPS), depending on their industry grouping;

- Annual Information Return of Income Taxes Withheld on Compensation (BIR Form 1604-CF) including the alphabetical listing of employees which is due on February 1, 2010;

- Certificates of Compensation Payment/Tax Withheld (BIR Form 2316) which is also due for distribution to employees on or before February 1, 2010.

Those preparing these returns have to remember the increased amount of basic personal and additional exemptions of individual taxpayers amounting to P50,000 and P25,000, respectively, regardless of status (i.e., single, head of family or married) and the tax exemption of minimum wage earners.

  • Preparation of Inventory List. 
Under existing tax regulations, taxpayers are required to file an inventory list of stocks-in-trade, raw materials, goods in process, supplies, and other goods not later than 30 days after the close of the taxable year.

Hence, taxpayers whose accounting period ends on December 31, 2009 should file their annual inventory list on or before January 30, 2010. In preparing the inventory list, taxpayers should ensure that the amount of ending inventory declared in the list will be the same amount reported in the audited financial statements as well as in the annual income tax return.

Since the inventory balances in the list are unaudited, it is advisable to submit an amended list in case there will be material audit adjustments. It is important that the inventory balances in the inventory listing should tally with the inventory balances in audited financial statements and annual income tax return.

  • Compliance with eDST System. 
Taxpayers who are mandated to use the web-based electronic documentary stamp tax (eDST) system in the payment/remittance of their documentary stamp tax (DST) liabilities and the affixture of the prescribed documentary stamp on taxable documents have until December 31, 2009 to comply with the transitory provisions of Revenue Regulations (RR) No. 07-2009. Under the said regulations, eDST system will be fully implemented by the BIR beginning January 1, 2010.

It is never early to prepare for your taxes. If your company wants to have a smooth year-end and begin 2010 stress-free, it is best to start preparing for all the BIR requirements before the year ends to get a head start on your tax preparation next year.

RA 9504: Tax Exemption on Minimum Wage Earners

The President signed into law on June 17, 2008 Republic Act No. (RA) 9504 granting additional tax relief to individuals and corporations, as follows:

1. Exemption of minimum wage earners

The new law exempts minimum wage earners in the private and public sector from payment of income tax. The exemption will cover not only the basic pay but also holiday pay, overtime pay, night shift differential, and hazard pay received by said minimum wage earners.

Prior to enactment of RA 9504, individual employees whose compensation income does not exceed the statutory minimum wage or five thousand pesos (P5,000) per month were exempted from withholding tax under Revenue Regulations No. 01-06. The law grants minimum wage earners full tax exemption by exempting them from payment of income tax.

2. Increase in personal and additional exemptions

RA 9504 increases the level of personal exemption allowance of each individual taxpayer to a uniform amount of P50,000 regardless of the status of the taxpayer, and additional exemption allowance for each qualified dependent from P8,000 to P25,000, as follows:


Old Law New Law Increment

Single individuals 20,000 50,000 30,000
Head of family 25,000 50,000 25,000
Married individuals 32,000 50,000 18,000
Additional exemption
for each qualified
dependent/child 8,000 25,000 17,000

The maximum number of qualified dependents remained at four.

2. Optional Standard Deduction (OSD) for corporations and increased OSD for individuals

The OSD is a scheme whereby a taxpayer is given the option to deduct from his gross revenue or gross income a lump sum equivalent to a percentage of such gross revenue or gross income for purposes of computing the net taxable income on which the income tax rate will be applied. This is in lieu of the itemized deduction scheme where the taxpayer lists down all his expenses and the corresponding amounts incurred to determine the amount of allowable deductions. The option can be availed of on an annual basis and shall be irrevocable for that taxable year.

The 10% OSD allowed to an individual engaged in business and practice of profession was increased to 40% of gross sales or gross receipts.

Furthermore, corporations are now given the option to avail of the OSD at 40% of gross income. Previously, they were only allowed to claim itemized deductions in computing their taxable net income.

The law shall take effect on July 7, 2008, 15 days after its publication in Malaya and Manila Bulletin newspapers on June 22, 2008. The new law shall be effective starting taxable year 2008. A revenue regulations will be issued by the BIR to implement the adjustment in the withholding taxes.

De Minimis Benefits

The BIR exempts de minimis benefits pursuant to Revenue Regulations (RR) No. 3-98, as amended. Examples of de minimis benefits include contributions of the employer for the benefit of the employee to retirement, insurance and hospitalization benefit plans; or certain benefits given to rank and file, whether granted under a collective bargaining agreement or not; or de minimis benefits; or fringe benefits to the employee which is granted is required by the nature of or necessary to the trade, business or profession of the employer; or such grant of the benefit or allowance is for the convenience of the employer.

The BIR sets a limit on the value of tax-exempt de minimis benefits. Under RR 8-00, as amended by RR 10-00, the BIR considers the following as de minimis benefits:

*
10 days monetized unused vacation leave credits;
*
medical cash allowance to dependents of employees not exceeding P750 per semester or P125 per month;

*
actual medical benefits not exceeding P10,000.00;
*
laundry allowance of P300 per month;
*
employee achievement awards 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;
*
flowers, fruits, books or similar items given to employees under special circumstances, e.g. on account of illness, marriage, birth of a baby, etc.; and
*
daily meal allowance for overtime work not exceeding 25% of the basic minimum wage.

Effective beginning May 10, 2008, (Revenue Regulations No. 5-2008) employees receiving the following benefits from their employers shall enjoy higher tax exemption thresholds:

o Rice allowance - from the current P1,000 per month to P1,500
o Uniform and clothing allowance - from the current P3,000 per year to P4,000

All other benefits not mentioned above shall be not be considered as de minimis benefits and shall be subject to withholding tax on compensation as per  Revenue Regulations No. 5-2011 on March 16, 2011 amending the provisions of Revenue Regulations Nos. 2-98 and 3-98 pertaining to the exemption from income tax from compensation and from fringe benefits tax of de minimis benefits.
ftp://ftp.bir.gov.ph/webadmin1/pdf/56846RR%205-2011.pdf