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    Chapter 11

    Uploaded by

    Alyssa Berangberang
    This document discusses fringe benefit tax in the Philippines. It defines fringe benefits as goods, services, or other benefits provided by an employer to employees other than basic pay. There are two main categories of fringe benefits subject to tax: 1) management perquisites, which are non-performance based incentives for certain employees, and 2) personal expenses of employees paid by the employer. Some fringe benefits are exempt from tax, such as those required by the employer's business or retirement/insurance contributions. Fringe benefit tax is a final tax imposed on benefits provided to employees and is withheld and remitted by the employer.

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    © All Rights Reserved
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    Chapter 11

    Uploaded by

    Alyssa Berangberang
    36 views2 pages
    This document discusses fringe benefit tax in the Philippines. It defines fringe benefits as goods, services, or other benefits provided by an employer to employees other than basic pay. There are two main categories of fringe benefits subject to tax: 1) management perquisites, which are non-performance based incentives for certain employees, and 2) personal expenses of employees paid by the employer. Some fringe benefits are exempt from tax, such as those required by the employer's business or retirement/insurance contributions. Fringe benefit tax is a final tax imposed on benefits provided to employees and is withheld and remitted by the employer.

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    This document discusses fringe benefit tax in the Philippines. It defines fringe benefits as goods, services, or other benefits provided by an employer to employees other than basic pay. There are two main categories of fringe benefits subject to tax: 1) management perquisites, which are non-performance based incentives for certain employees, and 2) personal expenses of employees paid by the employer. Some fringe benefits are exempt from tax, such as those required by the employer's business or retirement/insurance contributions. Fringe benefit tax is a final tax imposed on benefits provided to employees and is withheld and remitted by the employer.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    36 views2 pages

    Chapter 11

    Uploaded by

    Alyssa Berangberang
    This document discusses fringe benefit tax in the Philippines. It defines fringe benefits as goods, services, or other benefits provided by an employer to employees other than basic pay. There are two main categories of fringe benefits subject to tax: 1) management perquisites, which are non-performance based incentives for certain employees, and 2) personal expenses of employees paid by the employer. Some fringe benefits are exempt from tax, such as those required by the employer's business or retirement/insurance contributions. Fringe benefit tax is a final tax imposed on benefits provided to employees and is withheld and remitted by the employer.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    Chapter 11: FRINGE BENEFIT TAX Hybrid Expenses

    Fringe Benefits - When the employer incurs expenses


    which is purported partly for business
    - Pertains to all other benefits or
    and partly for employee’s incentive,
    incentives of employees other than the
    only 50% of the expense representing
    basic pay
    the employee incentive is subject to the
    - Under the NIRC, it pertains to goods,
    fringe benefit tax
    services, or other benefits furnished by
    the employer to the employee EXEMPT FRINGE BENEFIT

    GENERAL CATEGORIES OF FRINGE BENEFITS 1. Authorized and exempted from tax


    SUBJECT TO FINAL TAX under special laws
    2. Benefits required by the nature of, or
    1. Management perquisite benefits
    necessary to the trade, business or
    2. Employee personal expenses
    profession of the employer
    shouldered by the employer
    3. Benefit given for the convenience or
    3. Taxable de minimis benefit
    advantage of the employer
    a. Excess de minimis over their limit
    4. Contributions of the employer for the
    b. Benefits not included in the de
    benefit of the employee to retirement,
    minimis list
    insurance and hospitalization benefit
    (one) Management Perquisite Benefits plans
    5. Benefits given to rank and file
    - Also called as “management perks” are employees whether or not granted
    highly privileged incentives given only under a collective bargaining agreement
    to a special group of employees 6. De minimis benefits within their legal
    - Non-performance based limits
    - Not considered as compensation but as
    fringe benefits subject to fringe benefit FRINGE BENEFIT TAX
    tax
    - Is a final tax imposed on the fringe
    benefit furnished, granted or paid by
    the employer to the employee
    (two) Employee Personal Expenses 1. Housing Benefits
    - When an expense takes the nature of 2. Expense account
    an employee personal expense or 3. Vehicles of any kind
    expenditure and is paid or assumed by 4. Household personnel such as maid,
    the employer in default of a proximate driver and others
    business necessity, it is deemed fringe 5. Interest for the difference between the
    benefit in its entirety even if the market rate (12%) and the actual
    expense is receipted in the name of the interest granted
    employer 6. Membership fees, dues and other
    expenses borne by the employer for the
    employee in social and athletic clubs or
    other similar organizations
    7. Expense for foreign travel
    8. Holiday and vacation expense
    9. Educational assistance to the employee
    or his dependent
    10. Life or health and other non-life
    insurance premiums or similar accounts
    in excess of what the law allows

    CHARACTERISTICS OF THE FRINGE BENEFIT TAX

    1. Final tax
    - Withheld by the employer at source
    - The employee need not report the
    fringe benefits in his income tax return
    2. Tax upon the fringe benefits of
    managerial and supervisory employees
    - It is a tax upon the fringe benefit
    realized by the managerial or
    supervisory employee
    - It is a tax to the employee and not to
    the employer
    3. Paid by the employer
    - The tax is presumed withheld at source
    and remitted by the employer to the
    government
    4. Grossed-up tax
    - The monetary value or the amount of
    fringe benefit realized or taken home by
    the employee is effectively net of the
    final tax
    - The monetary value is first grossed-up
    by the complement percentage of the
    applicable fringe benefit tax rate before
    the fringe benefit tax rate is applied
    5. Due quarterly
    - Reported quarterly through BIR Form
    1603Q

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