Membership Fees, Dues and Other

Expenses

Membership fees, dues and other expenses borne

by the employer for the employee in social and
athletic clubs or other similar organizations.

The entire expenditures shall be treated as taxable

fringe benefits of the employee.

0
Illustration: (page 349)

Mr. Jose Alfred Herbolario was appointed as the vice

president for marketing of Baguio Gold
Corporation. As his privilege, the corporation paid
his Baguio Country Club membership fee
amounting to 1,700,000. how much is the amount
of the fringe benefit tax?

1
Solution:

The fringe benefit tax would be:

Monetary value of membership fee P1,700,000

Divide by GMV factor 68%
Grossed up monetary value P2,500,000
Multiplied by fringe benefit tax rate 32%
Fringe befit tax P800,000

2
Expenses for Foreign Travel

Reasonable business expenses which are paid for

by the employer for the foreign travel of his
employee for the purpose of attending business
meetings or conventions shall not be treated as
taxable fringe benefits.
In this instance, the following rules shall apply:
(a) Inland travel expenses such as those incurred for
food, beverages and local transportation are not
subject to FBT.

3
Cont.

For lodging cost in a hotel or similar establishment,

any cost incurred in excess of an average US
$300.00 per day shall be subject to FBT.
(b) Cost of economy and business class airplane
ticket shall not be subject to fringe benefit tax.
However, 30% of the cost of the First class airplane
ticket shall be subject to fringe benefit tax.

4
Illustration: (page 350)

Mr. Leonardo, the Vice President for Finance

Cordillera Corporation incurred the following
expenses attending a three-day foreign business
convention:

Plane ticket(USA) :
First class $ 1,500
Economy 800
Hotel accommodation 8000
Inland travel 1,500

Assume $1.00 = 40
5
 With Documentary evidence

First class plane ticket ($1,500x40x30%) P 18,000

Hotel accommodation [($8000-900)xP40)] 284,000
Total Fringe Benefits P 302,000
Divide by grossed-up monetary value factor 68%
Grossed-up monetary value P 444,118
Multiply by tax rate 32%
Fringe benefit tax due P 142,118

6
Without Documentary Evidence

First class ($ 1,500xP40) P60,000

Economy ($800 x P40) 32,000
Hotel accommodation ($8000xP40) 320,000
Inland travel ($1,500x P40) 60,000
Total fringe benefit P 472,000
Divide by grossed up monetary value 68%
Grossed-up monetary value
P 694,118
Multiply by tax rate
32%
Fringe benefit tax due P 222,118

7
Holiday and Vacation Expnses

Holiday and vacation expenses of the employee

borne by his employer shall be treated as
taxable fringe benefit.

8
Illustration: (page 351)

In 200x, san Miguel corporation provided a four-day

free vacation in Boracay to all of its employees of
which 80% are rank- and –file. Total expenses
incurred by the company for the said vacation
amounted to P2,000,000.

9
Solution:

FB for managerial employees (2Mx 400,000

20%) 68%
Divide by GMV

GMV P 588,235
Multiply by tax rate 32%
Fringe benefit tax due P 188,235

10
Educational Assistance
Taxable FB Non- Taxable FB

a) General rule a) Exception

Cost of the educational Scholarship grant to the employee by
assistance to the employee the employer, provided the following
which are borne by the conditions are met:
employer
 The education or study involved is
directly connected with the
employer’s trade, business, or
profession.

 There is written contract between

them to the effect that the employee
is under obligation to reman in the
employ of the employer for the
period that they mutually agreed
upon. 11
Cont.

Taxable FB Non- Taxable FB

b) Cost of educational b) The assistance was

assistance extended by an provided through a
employer to the competitive scheme under
dependents of an the scholarship program of
employee the company.

12
Illustration:

Mr. Jack Ammo is a regular faculty member of

Northern University. The school provides free
tition fees for the children of its employees. Are
the tuition fees subject to fringe benefits tax?

13
Insurance benefits

This benefit refers to the life insurance premiums or

similar amounts in excess of what the law allows.
The cost of life or health insurance and other non-
life insurance premiums borne by the employer for
his employee shall be treated as taxable fringe
benefit except for the following:

14
Cont.

1) Contributions of the employer for the benefit of

the employee pursuant to the provisions of
existing law such as under the SSS or GSIS, or
similar contributions arising from the provisions of
any other existing laws; and
2) The cost of premiums borne by the employer for
the group insurance of his employees.

15
Illustration: (page 353)

Particulars:
Life insurance P 10,200
Car insurance 5,440
Health insurance 4,080
SSS contribution 3,400
Group insurance 1,700
Total insurance premiums paid P 24,820

16
Cont.

Particulars:
Life insurance P 10,200
Car insurance 5,440
Health insurance 4,080
Total monetary value of FB P 19,720

FBT (19,720/68%)x32% P 9,280

17
Fringe Benefit Tax on Special Taxpayers
Recipient of FB Tax rate Tax base

1) NRAnetb 25% FBT on the GMV of Monetary value of the FB

the FB divided by 75%

2) a. alien individual
employed by regional
headquarters of a
multinational company or
by regional operating
headquarters of a
15% FBT on the GMV of Monetary value of the FB
multinational company
the FB divided by 85%
b. alien individual
employed by an offshore
banking unit of a foreign
bank established in the
Philippines 18
Cont.

Recipient of FB Tax rate Tax base

3) Foreign individual
employed by a foreign
service contractor or by
a foreign service 15% FBT on the GMV Monetary value of the
subcontractor engaged of the FB FB divided by 85%
in petroleum operations
in the Philippines;

4) Any of their Filipino

individual employees
who are occupying the 15% FBT on the GMV Monetary value of the
same position as those of the FB FB divided by 85%
occupied or head by the
alien employees

19
Cont.
Recipient of FB Tax rate Tax base

5) Employees in special Subject to normal tax Monetary value of the fb

economic zones, rate of FBT or the divided by 85% or 75%
including Clark Special special rates of 25% or
Economic zone and 15% as provided above
Subic Special Economic
and Free Trade Zone

20
Illustration: (page 354)

Brad Pitt, a NRAnetb in the Philippines received

P 60,000 from Waterpure Philippines, Inc. as
fringe benefit. The amount of FB to be withheld
and paid would be

GMV (60,000/75%) P 80,000

Multiplied by applicable tax rate 25%
FBT P 20,000

21
Fringe Benefits not Subject to FBT

a) FB which are authorized and exempted from

income tax under the code or under any special
law;
b) Contributions of the employer for the benefit of
the employee for retirement, insurance and
hospitalization benefit plans;
c) Benefits given to the rank-and-file, whether
granted under collective bargaining agreement or
not;

22
Cont.

d) If the grant of the fringe benefits o the employee

is required by nature of, or necessary to the
trade , business or profession of the employer;
or
e) If the grant of the FB is for the convenience of
the employer.
f) De minimis benefits

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