The tax-exemption cap of 13th month pay and other bonuses will be increased to Php 90,000 from Php Php 82,000 as agreed upon by the members of the bicameral conference committee on the Tax Reform for Acceleration and Inclusion (TRAIN) bill.
The said proposal will be finalized once the House and Senate have approved the bicam version of the measure, and then signed by President Rodrigo Duterte. If signed into law, it shall be implemented into law starting January 1, 2018.
The bicameral conference committee finalizes the Tax Reform for Acceleration and Inclusion.
“Ngayong magpa-Pasko na po, napagkasunduan ng bicam na muling taasan ang halaga ng 13th month pay at iba pang bonuses na hindi na kakaltasan pa ng buwis,” Senator Sonny Angara, chairman of the Senate ways and means committee, said in a statement on Thursday.
Presently, employees’ 13th month pay and other benefits are exempted from tax only if they do not exceed Php82,000 as mandated by Republic Act 10653.
The Senate proposed to retain the Php82,000 tax-free cap, but the approved version of the House raised it to Php100,000. To compromise, the bicameral agreed to raise the tax-exempt ceiling to Php90,000 effective January 2018.
Meanwhile, the Department of Finance originally proposed to scrap the 13th month pay tax exemption and make it part of the Php250,000 income tax exemption.
According to Labor Laws, the 13th month pay should be given to private sector employees regardless of employment status not later than December 24. It is equivalent to one-twelfth (1/12) of the basic salary of an employee within a calendar year.
Earlier, the bicameral committee have also agreed to exempt the first Php250,000 annual income of all individual taxpayers. They target to finish the proposed tax reform by December 11 since the Congress is set to go on Christmas break on December 13.
