Tax exemption cap only for 13th month, other bonuses – BIR
MANILA, Philippines – Taxpayers, only your 13th month pay, among other bonuses, are covered by the tax exemption cap signed into law in February by President Benigno Aquino III, the Bureau of Internal Revenue (BIR) said.
The agency released Revenue Regulation 3-2015 dated March 9, 2015, implementing the provisions of Republic Act No. 10653, specifically the increase of the total amount of exclusion to P82,000 ($1,846.39) from P30,000 ($675.58).
The tax exemption cap applies to the 13th month pay and other bonuses paid or accrued beginning January 1, 2015, the BIR said.
"The amount of P82,000 ($1,846.39) 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 document said.
The BIR document added that the exclusion from gross income is not applicable to self-employed individuals and income generated from business.
It added that all taxpayers and employers must ensure the correct computation and application of the P82,000 ($1,846.39) tax exemption cap.
The document, signed by Finance Secretary Cesar Purisima, with the recommending approval of BIR Commissioner Kim Henares, stated that any violation shall be subject to the corresponding penalties under the provisions of the National Internal Revenue Code.
Senator Juan Edgardo Angara, Senate co-author and sponsor of the measure, previously said that the signing of the law as a “long overdue tax relief” for hard-working Filipinos.
Senate President Pro Tempore Ralph Recto, principal author of the measure, also thanked the President for signing the law, which he said would “provide economic relief to workers both private and public, whose purchasing power has been substantially eroded due to inflation.”
But BIR expressed apprehension before that raising the tax exemption would make the economy suffer if no additional taxes are imposed in lieu of it.
The law's supporters argued that raising tax exemption caps would increase the purchasing power of employees and help boost the economy. – Rappler.com
US$1 = P44.41