PRESIDENT BENIGNO S.C. Aquino III has signed into law the measure that would raise the income tax exemption ceiling for the 13th month pay “and other benefits” like Christmas bonus and productivity incentives.
“According to the Office of the Executive Secretary, the President has signed into law the bill raising the ceiling on tax exemptions on bonuses to P82,000,” Communications Secretary Herminio B. Coloma Jr., said in a telephone interview Thursday.
The bill seeking to more than double the income tax exemption cap for employee bonuses to P82,000 from the current P30,000 was transmitted by Congress to Malacañang last Jan. 14.
The Senate on Nov. 26 last year approved on third and final reading its version of the bill -- under Senate Bill 2437 -- which seeks to make workers’ bonuses of as much as P82,000 tax-free.
The figure is higher than the P70,000 limit approved by the House of Representatives in September. The House of Representatives then adopted the Senate’s version.
House Committee on Ways and Means Chairman Rep. Romero S. Quimbo of Marikina (2nd district) in a statement yesterday said the measure will be effective “as early as June 2015, when half of the 13th month pay is released...”
Both chambers of Congress previously agreed to treat the measure as a priority, citing the need to adjust the rates due to inflation. The passage of the proposal will amend Republic Act No. 7833 which set the tax exemption ceiling at P30,000 in 1994.
Senator Juan Edgardo “Sonny” M. Angara, chairman of the Senate’s ways and means committee, said in a separate statement that the newly enacted law “has provided for automatic adjustment of the ceiling every three years, taking into account inflation, to ensure that the tax ceiling won’t be left unchanged again for more than two decades.”
Congress originally hoped the measure would take effect in time for last Christmas. Sen. Ralph G. Recto, one of the proponents of the measure, said Finance officials had requested that approval of the bill be delayed so it would take effect this year instead of end-2014.
The Department of Finance (DoF) and the Bureau of Internal Revenue (BIR) had earlier opposed the measure, saying it would create a huge revenue loophole of at least P26 billion for the original proposal of raising tax exemption to P70,000, adding that “should Congress ratify the bill which is currently pegged at P82,000,” the DoF would come up with a computation way higher than the P26.8 billion.
The Senate and House ways and means committees however, used as basis the P2-billion estimate by University of the Philippines economist Stella Luz A. Quimbo, who is also Mr. Quimbo’s wife.
Sought for comment yesterday, Internal Revenue Commissioner Kim S. Jacinto-Henares said: “With the passage of the bill into law, it will just mean the revenue goal of the BIR will go down by between P26-30 billion.”
“This is on top of the P16.9 billion of forgone revenue resulting from the additional de minimis granted,” she added, referring to an Executive measure that counts employee perks granted under collective bargaining agreements and productivity incentive schemes as tax-free.
“The revenue goal of the BIR will go down from P1.720 trillion to P1.674 trillion.”
source: Businessworld
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