House panel OKs bill exempting 13th month pay, bonuses from income tax

The House ways and means committee on Wednesday approved a measure exempting employees’ 13th month pay and bonuses up to P70,000 from being taxed.

The panel approved the consolidated bill seeking to raise the tax exemption ceiling on government and private employees’ bonuses and other benefits after a 15-minute deliberation.

Committee chair Rep. Romero Quimbo said it is about time for the cap to be raised from the current P30,000 since the amount has long been outpaced by inflation.

“[‘90s] pa ‘yan pero hindi na nagbago [yung tax ceiling] so we need to adjust that to inflation. Ginagamit lang natin yung very same parameters and values na ginamit natin [noon],” he said.

The lawmaker is targeting the passage of the bill in the House by the end of the year.

A similar bill seeking to raise tax exemption cap on bonuses has been filed in the Senate by Senator Ralph Recto.

Quimbo said that if the P30,000 tax-exempt income were adjusted according to current inflation rates, the amount that should be included from taxes is P70,000.  

Section 32 (B) 7(e) of the National Internal Revenue Code of 1997 states that 13th month pay and other benefits not exceeding 30,000 are excluded from the computation of income tax.

Quimbo said raising the tax exemption ceiling on 13th month pay and bonuses will give workers more money to spend for the Christmas season.

He added that this “improves goodwill and raises the morale of employees.”

“The 13th month pay also helps parents pay the tuition fees of their children,” Quimbo also said.

As of 2011, there are 20 million registered taxpayers in the Philippines. Of this number, 16 percent are considered middle-income taxpayers who pay the bulk of income taxes collected by the government.

The proposal to raise the tax exemption cap for bonuses has been opposed by Bureau of Internal Revenue chief Kim Henares, who warned that the government may lose P43 billion in revenue if the measure is passed. —KBK, GMA News