What are De Minimis Benefits?
The term “De minimis benefits” are benefits given by an employer to his employees that are of relatively small value. This is issued on top of the basic compensation and is meant for the general welfare of the employees. Since these are of relatively small value, these de minimis benefits are not considered as taxable compensation, and are therefore not subject to tax (tax exempt).
This was initially introduced by Revenue Regulations No. 8-2000 in the year 2000, and thus amended Revenue Regulations 3-98. It then underwent a few more revisions or amendments, including a significant change in Revenue Regulations No. 15-2011 dated March 16, 2011, as well as Revenue Regulations No. 8-2012 dated May 11, 2012. Currently, the latest amendment is Revenue Regulations No. 1-2015 dated January 5, 2015.
The list of de minimis benefits are as follows:
1. Monetized unused vacation leave credits of private employees not exceeding 10 days
2. Monetized value of vacation leave (vl) and sick leave (sl) credits paid to government official and employees
3. Medical cash allowance to dependents of employees, not exceeding P750 per employee per semester or P125 per month
4. Rice subsidy of P1,500 or one (1) sack of 50kg rice per month, with the amount not to exceed P1,500 per month.
5. Uniform and clothing allowance not exceeding P5,000 per year or per annum
6. Actual medical assistance to cover medical / healthcare needs, annual medica/ executive check-up, maternity assistance, and routine consultations, not exceeding P10,000.00 per year or per annum.
7. Laundry allowance not exceeding P300 per month
8. Employee achievement awards such as loyalty awards, safety achievements, etc. These must be in the form of tangible personal property other than cash or gift certificates, with the 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.
9. Gifts given during Christmas and major anniversary celebrations not exceeding P5,000 per employee per year or per annum.
10. Daily meal allowance for OT work / nightshift work not exceed twenty-five percent (25%) of the basic minimum wage on a per region basis.
11. Benefits received by an employee by virtue of a collective bargaining agreement (CBA) and productivity incentive schemes provided that the total monetary value received from both CBA and productivity incentive schemes combined do not exceed P10,000.00 per employee per taxable year.
All other benefits issued by employers that are not part of the list above will not be considered as “de minimis” benefits, and will thus be subject to withholding tax on compensation income, unless the total amount of these other benefits do not exceed the ceiling amount which is currently at P82,000 per year or per annum. The “de minimis” benefits cited above will not be counted towards this P82,000 ceiling.