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| BIR chief Kim Henares (Photo from BIR website bir.gov.ph) |
The Bureau of Internal Revenue is reminding government agencies and private companies that the 13th month pay, bonuses and
benefits of their workers are exempted from tax within the amount not exceeding P30,000. This means any amount beyond the P30,000 cut-off will be taxed, in accordance with Revenue Regulations No. 10-2008.
BIR Commissioner Kim Henares was quoted in the news explaining how the amount exceeding P30,000 will be taxed. She said that if for example an employee received P40,000 total 13th month pay and bonuses, P30,000 is tax-exempt and only P10,000 will be subjected to tax. The rule applies to all workers both in the private and public sectors.
Under Presidential Decree No. 851 (as amended), a
Marcos-era law passed in December 22, 1975, all employers are required
to pay their employees a 13th month pay not later than December 24 of
every year. The law states that the "Christmas season is an opportune time for society to show its concern for the plight of the working masses so they may properly celebrate Christmas and New Year."
There is a proposal from Senator Ralph Recto to increase the said tax exemption on the 13th month pay and other benefits to the amount P75,000.
The 13th month pay is equivalent to the total basic salary earned during the year divided by 12 months.
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