TUCP seeks tax-free overtime pay

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Well-paid and salaried employees will gain from two proposed measures pending before the House of Representatives that seek to exclude from taxes overtime and night-shift pay received by salaried employees, according to a labor group.

On Sunday, the Trade Union Congress of the Philippines (TUCP) in a statement expressed support for House Bills 2836 and 4682, which propose exemption of overtime and graveyard-shift benefits from the computation of the gross taxable income regardless of hourly pay rate.

“The measures will [make]middle-class families [prosper], rev up household consumption, create new demand for the products and services of domestic industries and stimulate economic growth amid persistent government under¬spending,” TUCP president and former senator Ernesto Herrera said.

At present, Herrera added, the overtime and night-shift premiums of workers who receive wages higher than the minimum have up to 32 percent in withholding taxes depending on the employee’s tax bracket.


Overtime pay is additional 25 to 30-percent compensation for labor rendered beyond the required maximum eight hours a day.

The night-shift premium is the additional 10-percent pay for work delivered between 10 p.m. and 6 a.m.

Under the Labor Code, if the overtime work falls within the graveyard shift, the overtime pay is added to the employee’s regular hourly rate before computing the night differential pay.

Both bills, which were introduced by Rep. Mar-Len Abigail Binay of Makati, are pending at the committee level.

Binay said that the tax reprieves “are meant to give greater substance to the mandates of the Constitution for the State to provide a living wage, a rising standard of living and improved quality of life for all.”

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