For PMAP
Grand Men Seng Hotel
June 26, 2014
Presented by:
Susan D. Tusoy, CPA, MPS
(powerpoint presentation courtesy of RO Christine Diwata T. Camina)
Legal Basis
• Sec. 33 of NIRC of 1997
• RR 3-98
• RR 8-2000
• RR 10-2000
• RR 5-2008
• RR 5-2011
• RMC 20-2011
FRINGE BENEFIT
Any good, service, or other benefit
furnished or granted in cash or in kind
by an employer to an individual
employee, except rank and file, such as
but not limited to the ff:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Housing;
Expense Account;
Vehicle of any kind;
Household personnel
Interest on loan at less than market rate
Membership fees, dues and other expenses;
Expenses for foreign travel;
Holiday and vacation expenses;
Educational assistance
Life/ health insurance and other non-life
insurance premiums or similar amounts in
excess of what the law allows.
COVERAGE
All fringe benefits given or
furnished to managerial or
supervisory
employees
excluding the rank and file.
NATURE
•The FBT imposed under Section
33 of the tax code shall be treated
as final income tax on the
employee that shall be withheld
and paid by the employer.
RATE OF TAX AND TAX BASE
• 32% of the gross-up monetary
value of the fringe benefit
GROSS-UP MONETARY VALUE
GMV = MV + FBT
100% = 68%+32%
Therefore:
GMV = MV ÷68%
GENERAL RULE IN THE
VALUATION OF FRINGE
BENEFITS
a.) If the FB is granted in money, or is directly paid for by the
employer, then the value is the amount granted or paid
for.
b.) If the FB is granted by the employer in property and
ownership is transferred to the employee, then the value
of the FB shall be equal to the FMV of the property
GENERAL RULE IN THE
VALUATION OF FRINGE
BENEFITS
c.) If the FB is granted by the employer is in property but the
ownership is not transferred to the employee, the value of
the FB is equal to the depreciation value of the property.
STEPS IN COMPUTING FBT
1. Determine the value of the benefit
2. Determine the Monetary Value (MV)
3. Divide the MV by 68% to derive the
GMV
4. Multiply the GMV by 32%
I. HOUSING
PRIVILEGES
Case 1. A – the employer leases
residential property for the use of
employee.
Value of the benefit - rental paid by the employer
Monetary Value
- 50% of the value of the
benefit
Tax base
- GMV
Illustration Case 1. A
Jupiter Co. leased a residential house for the use of its
branch manager. The rent agreed upon under the
contract was P 165,000 per month.
Value of the benefit
Monetary Value (50% of 165,000)
Tax base/GMV (P82,500 / 68%)
Monthly FBT (121,324x32%)
P165,000
82,500
P121,324
P 38,824
ACCOUNTING ENTRIES
If paid:
Dr: Fringe Benefit Expense
Dr: Fringe Benefit Tax Expense
Cr: Cash
165,000
38,824
203,824
If accrued but unpaid:
Dr: Fringe Benefit Expense
165,000
Dr: Fringe Benefit Tax Expense 38,824
Cr: Fringe Benefit Payable
165,000
Cr: Fringe Benefit Tax Payable 38,824
Case 1.B – The employer owns residential
property which was assigned to
an officer for his use as residence.
Annual value of the benefit - 5% of FMV of the
land and improvements as determined by the
BIR Com. or the Assessor, whichever is higher.
Monetary Value of the benefit - 50% of the value
of the benefit
Tax base - GMV
Illustration Case 1.B1 - COST IS HIGHER THAN FMV
Uranus Co. owns a condominium unit which an officer
of the company was allowed to use as residence. Cost
of the unit was P 12M. The FMV per Zonal is P 10M
and the Assessors’s is P 8M.
Monthly Value of FB (5% of P10M/12mos.)
P 41,667
Monetary Value (50% of 41,667)
P 20,833
GMV ( P 20,833/68%)
P 30,637
Monthly FBT
P 9,804
ACCOUNTING ENTRY
Case 1.B
Dr: Fringe Benefit Tax Expense
9,804.00
Cr: Cash/Fringe Benefit Tax Payable
9,804.00
Illustration Case 1.B2 - COST IS LOWER THAN FMV
Same as Case 1.B.1 but the cost of the unit was
only P 7M. The FMV per Zonal is P 10M and the
Assessor’s is P 8M. The condominium has a
remaining estimated useful life of 15 years.
Base Value for FBT
Less: Cost
Excess Amount
P 10M
7M
3M
====
Take Note!: The excess amount shall be amortized
throughout the remaining estimated useful life
of the residential property
Monthly amortization
(P 3M/15years/12months) P 16,667.00
ACCOUNTING ENTRY:
Dr: Fringe Benefit Expense
Dr: Fringe Benefit Tax Expense
16,667.00
9,804.00
Cr: Income Constructively Realized
Cr: Cash/Fringe Benefit Tax Payable
16,667.00
9,804.00
Case 1.C- The employer purchases residential property
on the installment basis and allows the employee to
use the same as his residence.
Annual value of FB -
5% of the acquisition cost
exclusive of Interest
MV of the FB
- 50% of the value of the benefit
Tax Base
- GMV
Illustration Case 1.C
PBB Co. purchased real property in installments
and allowed Mr. Y an officer to use the same as his
residence. Installment contract price was P 2M.
Annual Value of FB (5% of 2M)
P 100,000.00
MV (50% of P100T)
P 50,000.00
GMV(P50,000/68%)
P 73,530.00
Monthly FBT (P 73,530 x 32%/12 mos) P 1,961.00
Case 1.D - The employer purchases a
residential property and transfers ownership
thereof in the name of the employee.
Value of FB - Employer’s acquisition Cost or
FMV(zonal or TD), whichever is higher
MV of the FB the entire value of the Benefit
Tax Base
GMV
Illustration Case 1.D
Earth Co. purchased a house and lot and
transferred title thereto to its president. The
acquisition cost was P 1.5M. The zonal value is
P 2M, while market value per TD is P 2.5M
Value of FB (per TD the highest)
MV (entire benefit)
GMV(P2.5M/68%)
FBT (P 3,676,471x 32%)
P 2,500,000
P 2,500,000
P 3,676,471
P 1,176,471
Case 1.E - The employer purchases a residential
property and transfers ownership thereof to his
employee for the latter’s residential use at a price less
than the employer’s acquisition cost.
Value of FB
-
The difference between the FMV of
the BIR commissioner or the FMV of
the assessor, whichever is higher
and the cost to the employee.
MV of the FB - The entire value of the benefit
Tax Base
- GMV
Illustration Case 1.E
Venus Co. purchased a house and lot at a cost of P
2M. The property was transferred to its president to
be used for residential purposes for P 1.5M . Zonal
Value is P 2.3M, while the assessor’s value is P 2.5M.
FMV of assessor (higher than ZV)
Less: Cost to the employee
Value of the benefit
Monetary Value (Entire Value)
GMV (P 1M/68%)
FBT (P 3,676,471x 32%)
P 2,500,000
1,500,000
1,000,000
1,000,000
1,470,588
P 470,588
HOUSING BENEFITS WHICH ARE NOT
TAXABLE
a.) Housing privilege of military officials of the AFP
consisting of officials of PA, PN and PAF.
b.) A housing unit which is situated inside or
adjacent to the premises of a business or factory.
WITHIN THE MAXIMUM 50 METERS FROM THE
PERIMETER OF THE BUSINESS PREMISES
c.) Temporary housing for an employee who stays in
the housing unit for 3 months or less.
2. EXPENSE
ACCOUNT
1.
Expenses incurred by the employee which are paid by
his employer shall be treated as taxable FB;
2.
Expenses paid for by the employee but reimbursed by
his employer shall be treated as taxable FB.
The above expenses are not treated as fringe benefits
and therefore not taxable provided:
a.) the expenditures are duly receipted for and in the
name of the employer, and
b.) the expenditures are connected with the trade or
business of the taxpayer
3. Personal expenses of the employee paid for or
reimbursed by the employer to the employee
shall be treated as taxable FB of the employee
whether or not the same are duly receipted for
in the name of the employer
4. Representation and transportation allowances
which are fixed in amounts and are regularly
received by the employees as part of their
monthly compensation income shall not be
treated as taxable fringe benefits
3. MOTOR
VEHICLE
OF ANY KIND
Case 3.A – The employer purchases the
motor vehicle in the name of the
employee.
Value of the benefit - Acquisition Cost
Monetary Value
- Entire value of
the benefit
Tax Base
- GMV
Case 3.B – The employer provides the
employee with cash for the purchase of a
vehicle in the name of the employee.
Value of the benefit - Amount of cash received
Monetary Value
- Entire value of the benefit
Tax Base
- GMV
Case 3.C – The employer shoulders a
portion of the amount of the purchase
price of a motor vehicle in the name of
the employee.
Value of the benefit - Amount shouldered
by the employer
Monetary Value
- Entire value of
the benefit
Tax Base
- GMV
Case 3.D– The employer purchases the car on
installment in the name of the employee.
Value of the benefit - Acquisition cost
(exclusive of Interest) divided by 5
years
Monetary Value
- Entire value of
the benefit
Tax Base
- GMV
Case 3.D– The employer purchases the car
on installment in the name of the
employee.
Value of the benefit - Acquisition cost exclusive of
interest divided by 5 years
Monetary Value
- Entire value of the benefit
Tax Base
-
GMV
Illustration Case 3. D
Venus Co. purchased a car in the name of the manager on
installment basis in the amount of P 396,000.
Value of the benefit
(P396,000 / 5 yrs)
Monetary Value
GMV (P 79,200 / 68%)
Annual FBT (P 116,471x 32%)
Quarterly FBT
P
P
79,200.00
79,200.00
116,471.00
37,271.00
9,317.75
=======
Case 3.E – The employer owns and
maintains a fleet of motor vehicles for
the use of the business and the
employees.
Value of the benefit - Acquisition cost
of all vehicles not normally used for
bus. divided by 5yrs
Monetary Value - Entire value of the benefit
Tax Base
- GMV
Illustration Case 3. E
Pluto Co. owns a fleet of motor vehicles for the
use of the business. It has recently bought four
cars w/ total cost of P 5M for issuance to officers
to be used for business and personal purposes.
Annual Value of the benefit
(P5M/ 5 yrs)
Monetary Value (50% of 1M)
GMV (P 500,000 / 68%)
Annual FBT (P 735,294x 32%)
Quarterly FBT
P 1,000,000
500,000
735,294
235,294
P 58,824
=======
Case 3.F – The employer leases and
maintains a fleet of motor vehicles for
the use of the business and the
employees.
Value of the benefit - Amount of rental payments
for motor vehicles not
normally used for business
Monetary Value
- Entire value of
the benefit
Tax Base
- GMV
Illustrative Case 3.F
Suppose Pluto Co. does not own the motor vehicles
but leases them from Rent-a-Car, Inc, and pays
quarterly rental of P 41,250 for the vehicle used by
the employees for personal purposes.
Value of the benefit
Monetary Value (50% of P 41,250)
GMV (P 20,625 / 68%)
Quarterly FBT
P 41,250
20,625
30,331
P 9,706
======
Case 3.G – The use of aircraft or helicopters
owned and maintained by the employer shall
not be subject to FBT.
Case 3.H – The use of yacht, whether owned and
maintained or leased by the employer shall be
treated as taxable fringe benefit. The value of
the yacht shall be measured based on the
depreciation of a yacht at an estimated useful
life of 20 years.
4. HOUSEHOLD
EXPENSES
EXPENSES OF THE EMPLOYEE BORNE BY THE
EMPLOYER SUBJECT TO FBT
1. Salaries of household help,
personal driver of the employee,
and other.
2. Similar expenses like payment for
homeowners association dues,
garbage dues, etc.
5. INTEREST
ON LOAN AT
LESS THAN
MARKET RATE
If an employer lends money to his
employee free of interest or at a
lower than 12%, such interest
foregone by the employer shall be
as taxable fringe benefit.
•
The benchmark rate of 12% shall remain in effect
until revised by a subsequent regulation
•
The regulation shall apply to installment
payments or loans with interest rate lower
than 12% starting January 1, 1998.
Illustration 5. A
A local bank approved a loan of P 300,000 in favor of an
officer with interest thereon at special rate of 8% per
annum. Term of the loan is 4 months.
Interest foregone by the bank
(P 300,000 x 4% x 4/12)
Value of the benefit
GMP ( P 4,000/68%)
FBT ( P5,882 X 32%)
P 4,000
P 4,000
P 5,882
P 1,882
=======
6. SOCIAL AND ATHLETIC
CLUB FEES
Membership fees, dues, and other expenses borne
by the employer for his employee, in social and
athletic clubs and other similar organizations
shall be treated as taxable fringe benefits of the
employee in FULL
7. EXPENSES FOR
FOREIGN TRAVEL
1. FOREIGN TRAVEL BENEFITS WHICH ARE NOT
TAXABLE
a.) Inland travel expenses such as expenses for food,
beverages and local transportation;
b.) The cost of lodging in a hotel or similar
establishment amounting to an average of US $
300 or less per day
c. ) Cost of economy and business class airplane
ticket;
d.) 70% of the cost of first class airplane ticket
2. FOREIGN TRAVEL BENEFITS WHICH
ARE TAXABLE
a.)
30% of the cost of first class airplane ticket;
b.) Lodging cost in a hotel or similar
establishment in excess of 300 US Dollars per
day
c.) Traveling expenses paid by the employer for the
travel of family members of the employee.
d.) When there is no documentary evidence
showing that the employee’s travel abroad was in
connection with business meetings or conventions
• the entire cost of ticket, including cost of hotel
accommodations and other expenses incident
thereto shouldered by the employer, shall be
treated as taxable FB.
8. HOLIDAY AND
VACATION EXPENSES
ALL HOLIDAY AND VACATION EXPENSES OF THE EMPLOYEE
BORNE BY THE EMPLOYER SHALL BE TREATED AS TAXABLE
FRINGE BENEFIT
9. EDUCATIONAL
ASSISTANCE TO THE
EMPLOYEE OR HIS
DEPENDENTS
The cost of educational assistance to the
employee which is borne by the
employer shall, in general, be treated
as taxable FB.
EXCEPTION:
A scholarship grant to the
employee by the employer shall
not be treated as taxable fringe
benefit if:
1.) the education or study involved is directly
connected with the employer’s trade, business or
profession, and
2.) there is a written contract that the employee is
under obligation to remain in the employ of the
employer for a period of time mutually agreed
upon.
2. The cost of educational assistance
extended by an employer to the
dependents shall be treated as
taxable fringe benefits of the
employee.
When the assistance is
provided through a competitive
scheme under a scholarship program
of the company.
EXCEPTION: :
10. COSTS OF
INSURANCE
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.
EXCEPTIONS/NON-TAXABLE
a.) Contributions to the SSS, GSIS and similar
contributions under the provisions of any existing
law;
b.) The cost of premiums borne by the employer for
the group insurance of his employees.
FRINGE BENEFIT NOT SUBJECT TO
FRINGE BENEFITS TAX
A. FB which are exempted from income
tax under the Tax Code or under special
law;
B. Contributions of the employer for the
benefit of the employee to retirement,
insurance and hospitalization benefit
plans;
FRINGE BENEFIT NOT SUBJECT TO FRINGE
BENEFITS TAX
C. Benefits given to rank and file, whether
under a collective bargaining agreement
or not;
D. If the grant of fringe benefits to the
employee is required by the nature of, or
necessary to the trade, business or
profession of the employer;
FRINGE BENEFIT NOT SUBJECT TO FRINGE
BENEFITS TAX
E. If the grant of fringe benefits to the
employee is for the convenience of the
employer;
F. “De Minimis” Benefits
TAXATION OF FRINGE BENEFIT OF NON RESIDENT ALIEN
NOT ENGAGED IN TRADE OF BUSINESS IN THE
PHILIPPINES
a. Rate
b. Tax Base -
25%
the gross-up monetary
value of fringe benefit
computed by dividing the
monetary value of
FB by 75%
FILING OF RETURN AND PAYMENT OF TAX
DEADLINE:
on or before the 10th day of the month following the
end of quarter in which the fringe benefits were granted
(RR 4-2002)
On or before the 15th day of the month ff the end of the
quarter for employers registered with Electronic Filing
and Payment System (EFPS)
USE BIR FORM 1603: Quarterly Remittance Return of Income
Taxes Withheld.
DE MINIMIS BENEFITS
-
furnished or offered by an employer to his
employees, are not considered as
compensation subject to income tax an
consequently to withholding tax, if such
facilities are offered or furnished by the
employer merely as means of promoting
health, goodwill, contentment, or efficiency of
his employees.
De Minimis Benefits
Exempt
(Ceiling)
Taxable
a. Monetized VL of private employees
10 days
excess
b. Monetized VL & SL of Gov’t Employees
No limit
N/A
c. Medical cash allowance to dependents
P750/sem
or
P 125/mo.
Excess
d. Rice Subsidy (1 sack of 50kgs)
P1,500/mo
Excess
e. Uniform & Clothing Allowance
(RR 8-2012)
P5,000/yr
Excess
f. Actual Medical Assistance
P10,000/yr
Excess
g. Laundry Allowance
P300/mo
Excess
h. Achievement Awards –
Personal Tangible prop(for length of
service/safety achievement) with an
established written plan
P10,000
Excess
i. Christmas Gifts, Anniversary Gifts
P5,000
Excess
j. Daily meal allowance – overtime,
graveyard shift
25% of Basic
Min. Wage
Excess
De Minimis Benefits
“DE MINIMIS BENEFITS” conforming to the ceiling shall
not be considered in determining the P 30,000
the excess over the respective ceilings shall be considered
as part of the “other benefits” and the employee receiving
it will be subject to tax only on the excess over the
P30,000.
Submission of Form 2316 (RR 11-2013)
•Shall be given to employees on or before Jan. 31 the
ff year
•Employers of Minimum Wage Earners are still
required to issue Form 2316 on or before Jan. 31
of the ff year
Submission of Form 2316
(RR 11-2013) (cont.)
•In cases covered with substituted filing,
•employer shall furnish each employee
with the original copy of Form 2316 and
•file/submit to the BIR the duplicate copy
not later than Feb. 28 ff the close of the
taxable year.
Submission of Form 2316
(RR 11-2013) (cont.)
• Penal provision (Sec. 250)
• P1,000 for each failure but not to exceed
P25,000
• If committed in two consecutive years
• P10,000 and suffer imprisonment of not less
than 1 year and not more than 10 years
• May be compromised at P1,000 for each Form
2316 not filed without any maximum threshold
• THANK YOU
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