Members of the bicameral conference committee on the Tax Reform for Acceleration and Inclusion (TRAIN) bill have agreed to increase the tax-free cap of 13th month pay and other bonuses to P90,000 starting 2018.
Under the prevailing Republic Act 10653, employees’ 13th month pay and other benefits, including productivity incentives and Christmas bonuses, are exempted from tax only if they do not exceed P82,000.
“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.
The Senate version of the TRAIN retained the P82,000 tax-free cap while the approved version of the House of Representatives raised it to P100,000.
As compromise, members of the bicameral, who are tasked to reconcile the differences of the two versions, have agreed on Wednesday to raise the tax-exempt ceiling to P90,000 effective January 2018.
“Kung susumahin, aabot na sa P340,000 na kita kada taon ang hindi na pwedeng galawin ng gobyerno. Buong-buo na itong maiuuwi ng ating mga taxpayer sa kanilang mga pamilya,” Angara said.
The original proposal from the Department of Finance sought to scrap the 13th month pay tax exemption and to make it part of the all-inclusive P250,000 income tax exemption.
Citing the law, Angara said the 13th month pay should be given to private sector employees not later than December 24. It must be equivalent to one-twelfth (1/12) of the basic salary of an employee within a calendar year.
The senator reminded employers that they must pay their rank-and-file employees a 13th month pay regardless of the nature of their employment and whatever the method their wages are paid, provided they worked for at least one month during a calendar year.
Among the lawmakers who attended the Wednesday’s bicameral meeting were Angara, Senate Pro Tempore Ralph Recto, Senators Loren Legarda and Migz Zubiri, House Ways and Means Chairman Rep. Dakila Cua, House Deputy Speakers Miro Quimbo and Sharon Garin, House Minority Leader Danilo Suarez, Reps. Gus Tambunting, Xavier Romualdo and Aurelio Gonzales, as deputized by House Majority Floor Leader Rudy Fariñas.