One of the best news of 2015 was the higher tax exemption for 13th month pay and other bonuses for income accrued beginning January 1, 2015. The government raised the income ceiling to Php 82,000.00 giving employees from the private sectors and the government more room to enjoy their full one-month salary, incentives, and bonuses by year’s end. It was indeed a merry holiday season for the Pinoy employee last year.
The same may not be true this year as the new administration, through the Department of Finance, moves to reform the tax package for annual bonuses and 13th month pays. For easier reference, here is a list of the proposed changes on tax exemptions:
- Lower the tax exemption on the mandatory additional one-month salary, bonuses, and incentives. (Where a gross income of Php 250,000 a year or Php 20,833 per month would be tax free. The computation of the annual gross income shall include the mid-year bonuses and 13th month pay so that if the total amount exceeds Php 250,000, the employee will still be subject to tax as prescribed in the DOF’s proposed tax reforms).
- Remove the personal tax exemptions of working spouses.
- Remove the 20% tax exemption of senior citizens and Persons with Disability on certain goods and services and their exemption from the 12% value added tax.
Apart from the above, the government is also looking at lowering corporate income tax rates to 25%. Property and capital income taxes will likewise be reviewed for possible reduction. On the other hand, new taxes are expected to be imposed on sweetened beverages, chips, jewelry, mining, carbon, gambling (lottery and casinos) as well as alcohol and tobacco.
The reform measure is seen to help augment the needed funds for government projects on infrastructure, education, health, and social protection.
As a Pinoy employee (whether private or government), are you in favor of this proposal from the Department of Finance? Let us know your thoughts!