The general rule is that facilities and privileges of relatively small value, otherwise known as de minimis benefits, are not considered compensation subject to income tax. These benefits are given by the employer to the employee as a means of promoting the health, goodwill, contentment or efficiency of the employees.
Prior to RR 10-2008, the BIR already release RR 5-2008 which amends the list of de minimis benefits exempt from income tax. The list of de minimis benefits under RR 10-2008 and the previous regulations RR 5-2008, 10-2000 and RR 8-2000 are the same. Below is the present list of de minimis benefits:
Monetized unused vacation leave credits of employees not exceeding ten (10) days during the year and the monetized value of leave credits paid to government officials and employees
Medical cash allowance to dependents of employees not exceeding P750.00 per employee per semester or P125 per month
Rice subsidy of P1,500.00 or one (1) sack of 50-kg. rice per month amounting to not more than P1,500.00
Uniforms and clothing allowance not exceeding P4,000.00 per annum
Actual yearly medical benefits not exceeding P10,000.00 per annum
Laundry allowance not exceeding P300.00 per month;
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 an annual monetary value not exceeding P10,000.00 received by the employee under an established written plan which does not discriminate in favor of highly paid employees
Gifts given during Christmas and major anniversary celebrations not exceeding P5,000.00 per employee per annum
Flowers, fruits, books, or similar items given to employees under special circumstances, e.g., on account of illness, marriage, birth of a baby, etc..
Daily meal allowance for overtime work not exceeding twenty five percent (25%) of the basic minimum wage.
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