|
THE Bureau of Internal Revenue (BIR) said Friday that it has
exempted rice and clothing allowances received by employees from
income taxation.
In a revenue regulation, Finance Secretary
Margarito B. Teves said rice subsidy of P1,500 a month, uniform and
clothing allowance not exceeding P4,000 per year are benefits not
subject to income tax as well as withholding tax on compensation
income of both managerial and rank and file employees.
The directive comes amid record prices of rice,
which has seen the Philippines jacking up its import of the staple.
The BIR earlier said all fees received by
non-classified employees but members of corporate boards are still
subject to withholding and value added taxes (VAT).
Commissioner Lilian B. Hefti said fees received
by the director who is not an employee of the corporation are
subject to 10 percent creditable withholding tax, adding this is if
his gross income does not exceed P720,000, or 15 percent of the
gross income.
Aside from fees, Hefti said the creditable
withholding tax covers per diems, allowances, and any other form of
income payment made to the director.
Normally, directors’ duties and fees are
confined to the attendance of and participation in the meetings of
the board.
“These payments fall under professional fees,
talent fees, etc., for services rendered by individuals,”
Hefti’s directive read.
Aside from being liable for the payment of the
income tax, Hefti said directors who are not employees, having
received fees which had been reported in their annual income tax
returns as part of their gross income should likewise be liable to
pay business taxes on account of such receipt of income.
“They fall under the category of sellers of
services under Title IV of the [Tax] Code who are liable to pay the
12 percent VAT on their gross receipts pursuant to Section 108
thereof, or to the 3 percent percentage tax imposed under Section
116, should they fail to meet the VAT threshold,” she said.
Hefti clarified that fees received by directors
who also serve as employees are subject to the withholding tax on
wages, but they are exempted from paying VAT.
“The above tax treatment applies whenever it
is established that the director and the corporation has an
employer-employee relationship,” the directive read
.
-- Chino S. Leyco
|
