Bicam committee agree to increase tax exemption on bonus, 13th month pay

Members of the Senate and House of Representatives bicameral conference committee have agreed Wednesday to increase the tax exemption ceiling on 13th month pay and other bonuses to R90,000 in President Duterte’s tax reform package known as Tax Reform for Acceleration and Inclusion (TRAIN) bill.

This was revealed yesterday by Sen. Juan Edgardo Angara, head of the Senate panel and chairman of the Senate ways and means committee, as both panels are rushing a compromise TRAIN bill for ratification by both legislative chambers before they go on a month-long Christmas recess on

Dec. 15.

Under current law (Republic Act 10653), the 13th month pay and other benefits, including productivity incentives and Christmas bonuses, are exempted from tax if they do not exceed R82,000.

RA 10653 was sponsored by Angara.

Before it was signed into law in 2015, only bonuses not exceeding P30,000 were tax-exempt.

The Senate version of the TRAIN retained the R82,000 tax-free cap while the approved version of the House of Representatives raised it to R100,000.

As a compromise, members of the bicameral panels, who are tasked to reconcile the differences of the two versions, have agreed to raise the tax-exempt ceiling to P90,000 effective starting 2018.

The bicameral conference committee members have also agreed to exempt R250,000 annual taxable income of all individual income taxpayers.

The original proposal from the Department of Finance (DOF) sought to scrap the 13th month pay tax exemption and to make it part of the all-inclusive R250,000 income tax exemption.

Under the law, the 13th month pay should be given to private sector employees not later than December 24. It must be equivalent to one-twelfth of the basic salary of an employee within a calendar year.