Increase of Tax Exclusion to P82,000 for 13th Month Pay and Other Benefits (BIR Revenue Regulations No. 3-2015; Full Text)

REPUBLIC OF THE PHILIPPINES
DEPARTMENT OF FINANCE
BUREAU OF INTERNAL REVUENUE
Quezon City

March 9, 2015

REVENUE REGULATIONS NO. 3-2015

SUBJECT: Implementing the Provisions of Republic Act No. 10653, More Particularly on the Increase of the Total Amount of Exclusion to P82,000.oo for 13th Month Pay and Other Benefits from Gross Income Effectively Further Amending the Pertinent Provisions of Revenue Regulations No. 2-98

TO: All Internal Revenue Officials and Others Concerned

SECTION 1. SCOPE. — Pursuant to the provisions of Section 4 in relation to section 244 of the National Internal Revenue Code (NIRC) of 1997, as amended, these Regulations are hereby promulgated to implement the provisions of Republic Act (RA) No. 10653, “An Act Adjusting the 13th Month Pay and Other Benefits Ceiling Excluded from the Computation of Gross Income for Purposes of Income Taxation, Amending for the Purpose Section 32 (B), Chapter VI of the National Internal Revenue Code of 1997, As Amended”, more particular on the increase of the total amount of exclusion to Eighty Two Thousand Pesos (P82,000.00) for thirteenth (13th) month pay and other benefits from gross income, further amending, in effect, the pertinent provisions of Revenue Regulations 2-98.

SEC. 2. AMENDATORY PROVISION ON REVENUE REGULATIONS NO. 2-98. — The amount of Thirty Thousand Pesos (P30,000.00), specifically referring to the total amount of 13th month pay and other benefits as one of the exclusions from gross compensation income received by an employee prescribed under the pertinent provisions, including the example computations of Revenue Regulations (RR) No. 2-98, as amended, is hereby increased to “Eighty Two Thousand Pesos (P82,000.00)”, pursuant to the provisions of RA No. 10653.

Accordingly, the amount of P82,000.00 shall ONLY apply to the 13th month pay and other benefits prescribed under the provisions of Section 2.78.1 (B) (11) of RR No. 2-98, as amended, and shall in no case apply to other compensation received by an employee under an employer-employee relationship, such as basic salary and other allowances. Further, it must be emphasized that this exclusion from gross income is not applicable to self-employed individuals and income generated from business.

SEC. 3. TRANSITORY PROVISIONS. — The amount of P82,000.00 shall apply to the 13th month pay and other benefits paid or accrued beginning January 1, 2015.

For the effective implementation of these Regulations, all taxpayers-employers shall ensure the correct computation and application of the said increase on the 13th month and other benefits of the employees, in the year-end adjustments and the same shall be clearly indicated, among others, in the Certificate of Compensation/Tax Withheld (BIR Form No. 2316). The said BIR form shall be issued by the employer to the employee on or before January 31 of the succeeding calendar year, or if the employment is terminated before the close of such calendar year, on the day on which the last payment of compensation is made. In case the employee whose employment is terminated and subsequently employed by another employer before the close of the calendar year, the employee-transferee shall immediately furnish the new employer the accomplished BIR form issued by the previous employer for the appropriate withholding tax computation of the employee’s regular compensation and subsequent year-end adjustment, if any.

SEC. 4. PENALTIES. — Any violation of these Regulations shall be subject to the corresponding penalties under the pertinent provisions of the NIRC of 1997, as amended, and applicable regulations issued by the BIR.

SEC. 5. SEPARABILITY CLAUSE. — If any provisions of these Regulations is declared invalid by a competent court, the remainder of these Regulations or any provision not affected by such declaration of invalidity shall remain in force and effect.

SEC. 6. REPEALING CLAUSE. — The provisions of any existing regulations, rulings or orders, or potions thereof inconsistent with the provisions of these Regulations are hereby revoked, repealed or amended accordingly.

SEC. 7. EFFECTIVITY. — These Regulations shall take effect fifteen (15) days immediately after publication thereof in a leading newspaper of general circulation.

CESAR V. PURISIMA
Secretary of Finance

Recommending Approval:

KIM S. JACINTO-HENARES
Commissioner of Internal Revenue

26 thoughts on “Increase of Tax Exclusion to P82,000 for 13th Month Pay and Other Benefits (BIR Revenue Regulations No. 3-2015; Full Text)

  1. malou

    Is this what they call the implementing guidelines? The bonuses we received on March 15th have tax deductions based on the old cap saying the new cap is effective until the issuance or publication of the new cap? Having already deducted a huge amount of tax from the recent bonuses, will it be returned to the employees?,when?

    Reply
  2. Philip

    If I am currently enjoying the 15% preferential tax rate for ROHQ managerial and technical employees, will the exemption also apply to me?

    Reply
    1. CThomas

      Yes, I believe it also applies to you. As stated, “this shall in no case apply to other compensation received by an employee under an employer-employee relationship, such as basic salary and other allowances.” Unless the 15% ROHQ provision also covers your 13th month pay, which I think not, owing to my experience in HR in a similar Industry. Excwpt if there is an amended provision to be included in the RR.

      Reply
      1. Jan

        CThomas,

        With your vast experience on ROHQ, For companies from US, Are the Managers with the 15% Tax also mandatory given the 13th Month Pay? I heard of few ROHQ already that they have 13th month plus additional perks as Manager. Not sure though if they are just bragging on it. There are BPO who claims the same but had no chance to validate it with HR.

        Since you have the HR experience, you must have the knowledge of the ROHQ offering here in the Philippines…. Please reply as we were excluded on 13th mon pay as this are not mandated…Only our people enjoy the benefits which I found it strange. But perhaps you can shed light on this concern and industry practice. Tnx.

        Reply
  3. Iris

    The company that I work for provides 14th month pay incentive for employees that have attained 5 years tenure. As per RR 3-2015, loyalty awards are covered by the new regulation but our compensation and benefits representative claims that it’s still taxable because the 14th month pay bonus is a company initiative and not a government mandate. Is their assertion valid?

    Reply
  4. Mina

    Our company provides incentives. If we exceed 30,000 incentives, we were automatically taxed for it. And the new cap states, 13th month pay and OTHER benefits” So I am assuming incentives are part of “OTHER benefits.” Am I correct?

    Reply
  5. mortgage

    Restrictions may include requirements to buy home insurance coverage as well as home mortgage insurance coverage,
    or repay exceptional debt prior to marketing the home.

    Reply
  6. Max

    My 13th Month Pay for the past 2 years has not been exempted from tax even if the gross amount of my 13th month pay does not even exceed P 15,000. I asked our HR regarding this and they would say that this is due to the “other benefits received from the company” as stated on the BIR Code and in my case, since I am in the sales industry, we are given incentives upon reaching our monthly quotas, thus when summed up it would exceed the amount for exemption. How can this be true when the incentives we got were already taxed?
    Please help me be on this. Thank you.

    Reply
  7. Margaret

    For clarification, does this entail the company to base the tax computation on the formula below:

    1.). Total of Christmas Bonus and 13th Month –
    PhP82,000 = Excess of PhP82K
    2.). Excess of PhP82k X 32% = Net Bonus

    OR, is it computed individually and not based on the total amount of both bonuses?

    Appreciate a response. Thanks!

    Reply
  8. Johnlee

    I just want to ask questiona, Is the amount of Php82,000 ceiling for tax exemption for 13th Month Pay and other bonuses is cumulative? or individual?
    Thanks.

    Reply
  9. Jane

    If we receive transportation allowance on top of the basic salary, will the transportation allowance be included in the tax exclusion under P82,000?

    Reply
  10. Imee J

    How about cash incentives of sales promoter who are minimum wage earners and reach their quota subject to what kind of tax? Can we apply the 10% w/holding tax on commission?

    Can we include this in the exclusion?

    Reply
  11. Joseph

    I am currently enjoying the 15% preferential tax rate for ROHQ managerial and technical employees.

    Because of this increase, my gross taxable income no longer meets / exceeds the required threshold of 975,000 (82k is being deducted)

    The company is saying that i should now be subjected to regular income tax.

    Any opinion on this will be highly appreciated.

    Thanks.

    Reply
    1. Janine

      Hi Joseph,

      From the word “GROSS” annual compensation of 975K, there should not be any kind of deductions. Please refer to Revenue Regulations 11-2010 (Section 4 on Gross Compensation).

      Regards.

      Reply

Leave a Reply

Your email address will not be published. Required fields are marked *