Knowing de minimis benefits is key to having an accurate payroll processing.

We have discussed in Remember that you should include these benefits on your payroll but should be tax exempt. As an employer
our previous article about some of the things that you are doing wrong in your Philippine payroll process that these benefits are also deductible from your income. Here is an illustration to further explain how to view
this is a common mistake. In this article, we will discuss more about this type of employee benefits. de minimis benefits in payroll processing.
What are de minimis benefits?
BIR Revenue Regulation No. 3 1998 (C), defined the term de minimis benefits as facilities or privileges
Salaries & Wages (Basic Compensation) Income Tax Rate
furnished or offered by an employer to his employees that are of relatively small value and are offered or
furnished by the employer merely as a means of promoting the health, goodwill, contentment, or efficiency De Minimis Benefits Exempt
of his employees.
Excess of De Minimis (Add with 13thMonthPay
and Bonuses = P82,000.00) Exempt
These benefits are similar to fringe benefits in the sense that they are additional benefits in addition to basic
compensation. However, unlike finge benefits they are totally non taxable. Employers are also not required Benefits & Bonuses in Excess of P82,000.00
to give these kind of benefits but they are highly encouraged. Rank-And-File Employee Income Tax Rate
Managerial and Supervisory Fringe Benefit Tax Rate
Types of de minimis benefits
All Other Benefits Income Tax Rate
1. Monetized unused vacation leave credits of employees not exceeding ten (10) days during the Fringe Benefit Defined
year; (RR No. 5-2011).
2. Monetized value of vacation and sick leave credits paid to government officials and employees;
Fringe benefit means any good, service or other benefit furnished or granted by an employer in cash
(RR No. 5-2011)
or in kind, in addition to basic salaries to employees (except rank and file employees) such as, but not
3. Medical cash allowance to dependents of employees, not exceeding P750 per employee per
limited to the following:
semester or P125 per month; (RR No. 5-2011)
4. Rice subsidy of P1,500 or one (1) sack of 50 kg. rice per month amounting to not more than 1. Housing;
P1,500; (RR No. 5-2011) 2. Expense account;
5. Uniform and Clothing allowance not exceeding P5,000 per annum; (RR No. 8-2012)
3. Vehicle of any kind;
6. Actual medical assistance, e.g. medical allowance to cover medical and healthcare needs, annual
medical/executive check-up, maternity assistance, and routine consultations, not exceeding 4. Household personnel, such as maid, driver and others;
P10,000.00 per annum; (RR No. 5-2011) Interest on loan at less than market rate to the extent of the difference between the market rate
5.
7. Laundry allowance not exceeding P300 per month; (RR No. 5-2011) and actula rate granted;
8. Employees achievement awards, e.g., for length of service or safety achievement, which must be Membership fees, dues and other expenses borne by the employer for the employee in social
6.
in the form of a tangible personal property other than cash or gift certificate, with an annual and athletic clubs or other similar organizations;
monetary value not exceeding P10,000 received by the employee under an established written plan 7. Expenses for foreign travel;
which does not discriminate in favor of highly paid employees; (RR No. 5-2011)
8. Holiday and vacation expenses;
9. Gifts given during Christmas and major anniversary celebrations not exceeding P5,000 per
employee per annum; (RR No. 5-2011) 9. Educational assistance to the employee or his dependents; and
10. Daily meal allowance for overtime work and night/graveyard shift not exceeding twenty-five Life or health insurance and other non-life insurance premiums or similar amounts in excess of
percent (25%) of the basic minimum wage on a per region basis; (RR No. 5-2011) 10.
what the law allows.
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. (RR No 1-2015)
Treatment of de minimis benefits in the Philippine payroll process