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To BIR: Relax certain fringe benefit tax rules for MSME employees

Senator Win Gatchalian called on the Bureau of Internal Revenue (BIR) to be more liberal in applying certain rules on fringe benefit tax for the duration of the enhanced community quarantine. This will encourage Micro Small and Medium Enterprises (MSMEs) in giving additional benefits to their employees so they can stock up on necessities while they stay indoors. These benefits can come in the form of allowances, grocery items, or any financial assistance equivalent to one month pay.


PASAY CITY, Philippines – Visitors and traders check out the Manila FAME, a government-sponsored trade fair for local small- and medium-scale enterprises (MSEs) and artisan communities where local designers can create and showcase products for the global market, at the World Trade Center, 19 Oct 2019. Senator Win Gatchalian, meanwhile, is appealing to the Bureau of Internal Revenue (BIR) to relax the rules on fringe benefit tax to encourage more employers like MSEs to release their employees’ benefits, including 13th month pay and others, during the COVID-19 crisis. Photo by Mark Cayabyab/OS WIN GATCHALIAN

The lawmaker said although fringe benefits or any perks given to rank and file employees are not subject to fringe benefit tax, the tax code requires employers to pay 35% fringe benefit tax on the benefits given to managerial and supervisory employees. Gatchalian pointed out that MSMEs might think twice in giving additional benefits to all of their employees given the hefty fringe benefit tax.

He tells the BIR that these employee benefits can actually be advantageous on the part of the employers because it will ensure the health of their staff during and after this time of health crisis especially if they want to retain the same workforce and won’t need to train a new set of employees. Under the National Internal Revenue Code (NIRC), if the benefits are given for the convenience of the employer, it is exempt from fringe benefits tax of 35%.

“I appeal to the BIR to do its share and consider these employee benefits so that small and startup businesses can have the reason to provide for their employees”, said Gatchalian.

“Marami sa mga empleyado sa bansa ay nagtatrabaho sa mga maliliit na negosyo. Kung hindi natin sila tutulungan at bibigyan ng ayuda, lalabas at lalabas sila ng kanilang mga bahay para maghanapbuhay dahil natatakot sila na kapag hindi sila pumasok sa trabaho ay baka hindi nila matanggap ang sweldo nila. Maliwanag na ang ganitong sitwasyon ay lumalabag sa panuntunan ng gobyerno na mahinto ang pagkalat ng nakamamatay na virus”, Gatchalian shared.

The senator said relaxing the rules on fringe benefit tax will encourage more employers to release their employees’ benefits at this crucial time, including 13th month pay and others.

MSMEs account for 99.56% of total businesses in the country and considered as the backbone of our economy, that is why Gatchalian said it is important to look after the welfare of their employees to keep the economy running.