tax shields...

**shadow** · March 15th, 2012 09:36 PM

naisip ko lang yun mga tax shield ni corona, what are the different allowances and their corresponding maximum amount that a private employee legally avail?

**wowiesy** · March 15th, 2012 11:32 PM

Originally Posted by shadow

naisip ko lang yun mga tax shield ni corona, what are the different allowances and their corresponding maximum amount that a private employee legally avail?

ang basic na alam ko as per Tax Code, can only fall under De Minimis benefits, or under Fringe Benefit (which is subject to Fringe Benefit Tax - used as tax shield by the company, not necessarily by the employee, pero nakikinabang din ang employee along the way)... For De Minimis - well... don't even bother as the Tax Code hasn't been updated for so long ( 1 sack rice per month, clothing allowance or laundry ata upto what.. mga 500 pesos lang ata or something and there are others).. basta.. mababa sya... sa Fringe Benefit.. well.. like car plan... it somehow benefits the employee... but the company (as I learned recently) needs to pay the Fringe Benefit Tax on those benefits... and the Fringe Benefit Tax paid, is subject for deduction for Income Tax purposes... (so aside from the actual fringe benefit as given na deductible sa income tax, the fringe benefit tax paid, is also deductible for income tax purposes - that is for the corporation or the owner of the company - hindi sa mga empleyado)...

the others.. well.. possibly result na ng "creative accounting" <?> ... yung ibang mga allowed deductions under a business (for income tax purposes).. may mga threshold din so di rin maipasok lahat (kahit na legit talaga ang mga expenses).. BIR puts a cap on the deductions (say, only upto xx% of sales ang puwede icharge na representation, etc)... possible na all these other "tax shields" ay talagang papasok sa business expenses as deductions to income tax... side issue na lang yung nakikinabang yung empleyado (like reimbursable receipts upto x,xxx per month, etc)..

sa Supreme Court.. well.. perhaps wala pang na issue na LA ang BIR in all its history sa isang sitting Supreme Court Justice... kaya siguro la pa precedent... and if the alpha list (as per testimony of witness Bayuga) only indicates the basic salary, BIR wouldn't also have a basis to even suspect that they can possibly assess deficiency tax on the other incomes from within the total compensation received from the Judiciary...

kaya nga nabanggit ko ata in a separate thread.. possible stalemate uli ito... all tax cases eventually go through CTA (Court of Tax Appeals) and then eventually sa Supreme Court... so.. granted na mag LA ang BIR sa ganitong kaso on a sitting Justice.. the process for the tax assessments.. eventually aakyat ng CTA ang SC... so will SC decide against itself kung sakali? *assuming of course that the SC justices will fight the assessments all the way through and will only pay the deficiency taxes kapag may final ruling na*... maaari din naman na the SC made its internal rules that these allocations are tax free... but then, only the House of Representatives ang pwede mag start ng mga tax measures (such as exemptions) so legal issue uli... unless nakalagay sa Law (anumang batas kung saan pinagbasehan ng Supreme Court yung mga other allocations na to aside from basic salary na tax free na talaga ito)...

**wowiesy** · March 15th, 2012 11:38 PM

De Minimis:

The BIR sets a limit on the value of tax-exempt de minimis benefits. Under RR 8-00, as amended by RR 10-00, the BIR considers the following as de minimis benefits:

10 days monetized unused vacation leave credits;
medical cash allowance to dependents of employees not exceeding P750 per semester or P125 per month;
rice subsidy of P1,000.00 or one-sack of rice per month;
uniforms and clothing allowance not exceeding P3,000.00 per year;
medical benefits not exceeding P10,000.00;
laundry allowance of P300 per month;
employee achievement awards in the form of tangible personal property other than cash or gift certificate, with an annual monetary value not exceeding P10,000 received by the employee under an established written plan;
flowers, fruits, books or similar items given to employees under special circumstances, e.g. on account of illness, marriage, birth of a baby, etc.; and
daily meal allowance for overtime work not exceeding 25% of the basic minimum wage.

**CVT** · March 16th, 2012 08:49 AM

^^^ Ayos bro.,- maibigay ko nga ito sa HR namin...

15.2K:froggy:

**shadow** · March 16th, 2012 09:22 AM

I know the de minimis... na walang ka kwenta kwenta...any other tax shield na malaking amount na pwedeng mawala? fringe benefits hinde rin pwede yan dahil more or less company sumasalo eh...

wala ba sa private katulad ng sa SC na mga RATA, special allowance, etc, etc.na tax free?

paano mababawasan ng 10-12% tax ang monthly income?

honestly I alaready to talked to a tax lawyer, more or less ganyan din mga sinasabi... I want what Corona is getting kahit yun mga tax free allowances lang niya...bwisit!

hinde rin pwede na liitian ang basic then mas malaki ang allowance, since meron ngang capped ang allowances...

**shadow** · March 16th, 2012 09:37 AM

since OFWs are income tax free, what if palabasin na OFW ang contract eh sa abroad but supposedly assigned and based here, will it fly?

expat but tax free?

**_Qwerty_** · March 16th, 2012 10:17 AM

actually yang de minimis if maximized eh malaki laki din yan..

10 days monetized unused vacation leave credits; (if 1T per day sweldo mo, this is 10T tax free)
medical cash allowance to dependents of employees not exceeding P750 per semester or P125 per month; 125 x 12 = 1,500
rice subsidy of P1,000.00 or one-sack of rice per month; 1T x 12 = 12,000
uniforms and clothing allowance not exceeding P3,000.00 per year; = 3,000
medical benefits not exceeding P10,000.00; = 10,000
laundry allowance of P300 per month; = 300 x 12 = 3,600
employee achievement awards in the form of tangible personal property other than cash or gift certificate, with an annual monetary value not exceeding P10,000 received by the employee under an established written plan; = 10,000
flowers, fruits, books or similar items given to employees under special circumstances, e.g. on account of illness, marriage, birth of a baby, etc.; and = 10,000
daily meal allowance for overtime work not exceeding 25% of the basic minimum wage. 1T a day x 25% = 250 x 26 days = 6,500 x 12 = 78,000 a year

TOTAL = 138,100 din yan tax free

**e-bundok** · March 16th, 2012 11:56 AM

register your organization as NGO/charitable foundation under SEC instead of a corporation. you can then apply for a certificate of tax exemption from the BIR, but i think you have to show proof that the organization is a legitimate NGO which I think is not so hard because you only have to show legal proof of such. there's a fine print though as to what's still taxable and what's actually not. i think salaries of employees are subject to the usual internal revenue taxes, but "volunteers" are supposedly pro-bono...

of course, you may want to clearly spell this out to the volunteer to avoid possible future complications with the tax police. and of course, agreement is still subject to he statutory social security benefits...

employer saves on taxes, may even give his volunteer a nice cut from the spoils of his reduced tax obligations and both parties are happy...

**shadow** · March 16th, 2012 12:01 PM

Originally Posted by e-bundok

register your organization as NGO/charitable foundation under SEC instead of a corporation. you can then apply for a certificate of tax exemption from the BIR, but i think you have to show proof that the organization is a legitimate NGO which I think is not so hard because you only have to show legal proof of such. there's a fine print though as to what's still taxable and what's actually not. i think salaries of employees are subject to the usual internal revenue taxes, but "volunteers" are supposedly pro-bono...

of course, you may want to clearly spell this out to the volunteer to avoid possible future complications with the tax police. and of course, agreement is still subject to he statutory social security benefits...

employer saves on taxes, may even give his volunteer a nice cut from the spoils of his reduced tax obligations and both parties are happy...

registering the company as charitable institution is out of the picture, impossible sa amin yan... so wala na talaga pag asa unless you cook the books? pucha naman oh! SC bakit kayo pwede kami hinde! bullshit!

**_Qwerty_** · March 16th, 2012 12:07 PM

yung ibang kilala ko 2 books.. yung isa puro basic salary lang.. so yun lang binabayarang tax nung mga employees.. don sa isa nakalagay yung totoong salaries..