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What bonuses are included in the increased tax exemption pursuant to our RA 10653?

18 March 2015 No Comment

According to the rules recently issued by the Bureau of Internal Revenue to implement Republic Act 10653, the higher tax exemption cap of P82,000 applies to the 13th month pay and other bonuses paid or accrued beginning January 1, 2015:

“The amount of P82,000 shall only apply to the 13th month pay and other benefits prescribed under the provisions of Section 2.78.1 (B) (11) of RR No. 2-98 as amended, and shall in no case apply to other compensation received by an employee under an employer-employee relationship, such as basic salary and other allowances.”

The Section 2.78.1 (B) (11) of RR No. 2-98 referred to enumerates the bonuses included in the tax exemption cap:

“(11) Thirteenth (13th ) month pay and other benefits. —
(a) Thirteenth (13th) month pay equivalent to the mandatory one (1) month basic salary of officials and employees of the government, (whether national or local), including government-owned or controlled corporations, and or private offices received after the twelfth (12th) month pay; and
(b) Other benefits such as Christmas bonus, productivity incentive bonus, loyalty award, gifts in cash or in kind and other benefits of similar nature actually received by officials and employees of both government and private offices.”

Benefits of similar nature include, per previous statements of the BIR, the PBB and PEI.

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