So Little, So Much

Before I go on with the topic, I'm posting a link to my previous blog which shall remind you that voting is still on for the Filipino blog of the week. The link is here. You can vote once daily, and it will be up until Saturday, I think.

While we are at the season of giving, I would like to tackle on the non-taxability of the Christmas Gifts handed to employees at the threshold amount of Php.5,000.00.

Gifts given during Christmas and major anniversary celebrations not exceeding P5,000 per employee per annum shall be considered as “de minimis” benefits not subject to income tax as well as withholding tax on compensation income of both managerial and rank and file employees. The term “de minimis” benefits, are those of relatively small value and are given by the employer merely as a means of promoting the health, goodwill, contentment or efficiency of his employees. This is at times termed as additional bonus which usually is given to government employees aside from the mandated 13th month pay. For private companies, this may come as gift certificates or bundles of grocery packs.

The Bureau of Internal Revenue (BIR) ruled that “gifts given during Christmas and major anniversary celebrations not exceeding P5,000 per employee per annum” either in cash or in kind are exempt from income taxes. The excess of this P5,000, however, shall be added on the other benefits where the threshold is P30,000 annually and the excess of P30,000 shall then be deemed taxable.