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Fringe Benefit Tax (FBT) is imposed on the grossed-up monetary value of fringe benefits provided to employees. Common fringe benefits include housing, vehicles, interest-free loans, and health/life insurance premiums paid by the employer. Certain benefits are exempt from FBT, such as legally required SSS/GSIS contributions or benefits costing less than de minimis thresholds. FBT rates vary depending on whether the taxpayer is a resident corporation/individual or not, with rates ranging from 25-35% of the grossed-up fringe benefit value.

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23 views

Reviewer

Fringe Benefit Tax (FBT) is imposed on the grossed-up monetary value of fringe benefits provided to employees. Common fringe benefits include housing, vehicles, interest-free loans, and health/life insurance premiums paid by the employer. Certain benefits are exempt from FBT, such as legally required SSS/GSIS contributions or benefits costing less than de minimis thresholds. FBT rates vary depending on whether the taxpayer is a resident corporation/individual or not, with rates ranging from 25-35% of the grossed-up fringe benefit value.

Uploaded by

angel ciii
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Fringe Benefit Tax (FBT)

Definition
The term “compensation” means all remuneration for services performed by an employee for
his employer under an employer-employee relationship. Fringe benefit is defined as any goods, service
or other benefits furnished or granted by an employer to an individual employee. In short, it is a form
of pay which may be in form of property, services, cash or cash equivalent to supplement a stated
pay for the performance of service.

Final withholding tax imposed on the grossed-up monetary value of fringe benefit furnished or
granted to supervisory or managerial employee, whether an individual or a corporation.

Items of Fringe Benefits Subject to Tax


1) Housing
2) Expense account
3) Vehicle of any kind
4) Household personnel, such as made, driver and others.
5) Interest on loan at less than market rate to the extent of the difference between the market rate
and the actual rate granted.
6) Membership fees, dues and other expenses borne by the employer for the employee in social and
athletic clubs and similar organizations.
7) Expenses for foreign travel
8) Holiday and vacation expenses
9) Educational assistance to the employee or his dependents.
10) Life or health insurance and other non-life insurance premiums or similar accounts in excess of
what the law allows.

Tax exempt fringe benefits.


1) Fringe Benefits which are authorized and exempted from income tax under any special law such
as:
a) Contribution required under SSS law
b) Contribution required under GSIS law
c) Similar contribution under an existing law
d) Premiums for group insurance of employees
2) If the grant of fringe benefit is required by the nature of, or necessary to the trade, business or
profession of the employer.
3) De minimis Benefit
4) If the grant of fringe benefit is for the convenience or advantage of the employer.

FBT Rates

Classification of taxpayer RC, NRC, RA, NRAETB NRANETB


Monetary Value P xxx P xxx
Divide by grossed up rate 65% 75%
Grossed-up monetary value P xxx P xxx
X FBT rate 35% 25%
Fringe Benefit Tax P xxx P xxx
Valuation of Fringe Benefit
 General Rule
 Money, Amount granted.
 Non cash property with transfer of ownership, Fair market value (FMV) or zonal value
(ZV) of the property whichever is higher.
 Non cash property without transfer of ownership. Depreciation value of the property

De minimis benefits - facilities and privileges such as entertainment, medical services, or so called
courtesy discounts on purchases.

De minimis Benefit Nontaxable amounts


1. Monetized unused vacation leaves credits of private Up to 10 days during the year.
employees.
2. Monetized value of vacation and sick leaves credit Regardless of the n umber of days shall be
paid to government officials and employees. exempt from tax on compensation income.
3. Medical cash allowance to dependent of employees. Up to P1,500 per sem or P250 a month.
4. Rice subsidy Up to P2,000 or one 50kg sack per month
5. Uniforms and clothing allowance Up to P6,000 per year
6. Actual medical assistance Up to P10,000 per year
7. Laundry allowance Up to P300 per month
8. Employees’ achievement awards Up to P10,000 annual monetary value
9. Gifts given during Christmas and major anniversary Up to P5,000 per employee per annum
celebrations
10. Daily meal allowance for overtime work and Up to 25% of the basic minimum wage
night/graveyard shift
11. Benefits received by an employee by virtue of a Up to P10,000 per employee per taxable
collective bargaining agreement (CBA) and year (combined)
Productivity incentive schemes
12. “Other benefits” for amounts in excess of De minimis Up to P90,000
benefits threshold, together with the employees’ 13th
month pay

BIR ruling no. 293-2015 (CBA/CNA and Productivity Incentive Pay):\


 If not more than P10,000 - considered as De minimis.
 If more than P10,000 - the entire amount shall be included in the “other benefits” with
P90,000 ceiling.

Other benefits
1. Christmas bonus
2. Productivity incentive bonus
3. Loyalty awards
4. Gifts in cash or in kind and other benefits of similar nature actually received by officials and
employees of both government and private employees.
SPECIAL RULES IN COMPUTING THE MONETARY VALUE OF HOUSING BENEFITS.
Employer leases a residential property for the use Monetary value: Rental Paid x 50%
of the the employee.
Employer owns a residential property for the use Monetary value: the higher between FMV or
of the employee Zonal value x 5% x 50%
Employer purchase residential property in Monetary value: Acquisition cost, exclusive of
installment for use of the employee interest x 5% x 50%
Employer purchases residential property and Monetary value: the higher between acquisition
transfers ownership to employee cost or Zonal value as determined by the CIR.
Employer purchases residential property and Monetary value: the higher between the FVM in
transfers ownership to employee on lesser the real property declaration or Zonal value as
amount. determined by the CIR less cost to the employee.

RULES IN COMPUTING THE MONETARY VALUE OF MOTOR VEHICLES


Employer owns and maintains a fleet of motor Monetary value: Acquisition cost of vehicle not
vehicles for the use of the business and employees. normally used for business divided by 5 years x
50%
Employer leases and maintains a fleet of motor Monetary value: amount of rental payments not
vehicles for the use of the business and the normally used for business purposes x 50%
employees
Employer purchases vehicle in the name of the Monetary value: Acquisition cost
employee
Employer provides employee with cash for the Monetary value: cash received
purchase of the vehicle and ownership is placed in
the name of the employee.

Employer purchases the vehicle on instalment Monetary value: acquisition cost exclusive of
and the ownership is place in the name of the interest divided by 5 years
employee
Employer shoulders a portion of the amount oft Monetary value: amount shouldered by
he purchase price of vehicle and ownership is employer.
place in the name of the employee

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