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House agrees on tax exemptions of 13th month pay, bonuses


By Mario Casayuran

Members of the Senate and House of Representatives bicameral conference committees have agreed Wednesday to increase the tax exemption ceiling on the 13th month pay and other bonuses to P90,000 in President Rodrigo Duterte’s tax reform package known as Tax Reform for Acceleration and Inclusion (TRAIN) bill.

This was revealed yesterday by Sen. Juan Edgardo ‘’Sonny’ Angara, head of the Senate panel and chairman of the Senate ways and means committee, as both panels were rushing a compromise TRAIN bill for ratification by both legislative chambers before they go on a month-long Christmas recess starting December 15.

(Julian Abram Wainwright/Bloomberg / MANILA BULLETIN)

(Julian Abram Wainwright/Bloomberg / MANILA BULLETIN)

Under the current law (Republic Act 10653 which was sponsored by Angara), the 13th month pay and other benefits, including productivity incentives and Christmas bonuses, are exempted from tax if they do not exceed P82,000.  Before RA 10653 was signed into law in 2015, only bonuses not exceeding P30,000 were tax-exempt.

The Senate version of the TRAIN retained the P82,000 tax-free cap while the approved version of the House of Representatives raised it to P100,000.

As a compromise, members of the bicameral panels, have agreed to raise the tax-exempt ceiling to P90,000 effective starting 2018.

The bicameral conference committee members have also agreed to exempt P250,000 annual taxable income of all individual income taxpayers.

“Kung susumahin, aabot na sa P340,000 na kita kada taon ang hindi na pwedeng galawin ng gobyerno. Buong-buo na itong maiuuwi ng ating mga taxpayer sa kanilang mga pamilya,” Angara said. (In effect, annual income of up to P340,000 will no longer be touched by the government. Our taxpayers can bring the full amount to their families.)

The original proposal from the Department of Finance (DoF) sought to scrap the 13th month pay tax exemption and to make it part of the all-inclusive P250,000 income tax exemption.

Under the law, the 13th month pay should be given to private sector employees not later than December 24. It must be equivalent to one-twelfth (1/12) of the basic salary of an employee within a calendar year.

Angara reminded employers that they must pay their rank-and-file employees a 13th month pay regardless of the nature of their employment and whatever the method their wages are paid, provided they worked for at least one month during a calendar year.



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