Guide on Non-Performance-Based Bonus Tax Rules
CHRISTMAS BONUS – Here is a guide on the implementation of tax on non-performance-based bonus for employees.
Among the things that the working sector and the pensioners await every December is the Christmas bonus. It is different from the 13th month pay the companies released on the same month.
The law mandates employers and companies to release a 13th month pay to their employees every December. With regards to the Christmas bonus, it depends on the willingness of the employer or the company.
The bonus given to employees on December is like an act of appreciation for the services they have rendered to the company. The amount also depends on the employer.
There are two types of Christmas bonuses – the Performance-Based Incentives and the Non-Performance-Based Bonus or also called as the “Other Benefits”.
Let us talk about the Non-Performance-Based Christmas Bonus. Based on an article on Asean Briefing, this type of bonus fall in the same category as the 13th month pay – there is a tax exemption cap.
If the total of your Non-Performance-Based Christmas Bonus and your 13th month pay does not exceed Php 90,000.00, it is not subject for a tax deduction.
For example:
- Non-Performance-Based Bonus (Php 7,000.00) + 13th Month Pay (Php 20,000.00) = Php 27,000.00 (not subject for tax).
- Non-Performance-Based Bonus (Php 25,000.00) + 13th Month Pay (Php 90,000.00) = Php 115,000.00 (subject for tax deduction).
Based on the article, only the excess of the Php 90,000.00 exemption cap will be subject for tax deduction. The exact rate is not stated. More updates may be posted soon.
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