Article 18p. 18

NATIONAL INTERNAL REVENUE CODE TAXATION, TARIFF and CUSTOMS LAWS

(iv)

Other benefits such as productivity

incentives and Christmas bonus.

(as amended by RA No 10963)

(f)

GSIS,

SSS,

Medicare

and

Other

Contributions.

-

GSIS,

SSS,

Medicare

and

Pag-Ibig

contributions,

and

union

dues

of

individuals.

(g) Gains from the Sale of Bonds, Debentures

or other Certificate of Indebtedness. - Gains

realized

from

the

same

or

exchange

or

retirement

of

bonds,

debentures

or

other

certificate of indebtedness with a maturity of

more than five (5) years.

(h)

Gains

from

Redemption of Shares in

Mutual Fund. - Gains realized by the investor

upon redemption of shares of stock in a mutual

fund company as defined in Section 22 (BB) of

this Code.

SEC. 33. Special Treatment of Fringe Benefit. -

(A) Imposition of Tax. - Effective January 1, 2018 and

onwards, a final tax of thirty-five percent (35%) is hereby

imposed on the grossed-up monetary value of fringe

benefit furnished or granted to the employee (except

rank

and

file employees as defined herein) by the

employer, whether an individual or a corporation (unless

the

fringe

benefit

is required by the nature of, or

necessary to the trade, business or profession of the

employer,

or

when

the

fringe

benefit

is

for

the

convenience or advantage of the employer). The tax

herein imposed is payable by the employer which tax

shall be paid in the same manner as provided for under

Section 57(A) of this Code. The grossed-up monetary

value

of the fringe benefit shall be determined by

dividing the actual monetary value of the fringe benefit

by sixty-five percent (65%) effective January 1, 2018 and

onwards: Provided, however, That fringe benefit furnished

to employees and taxable under Subsections (B), (C), (D),

and (E) of Section 25 shall be taxed at the applicable rates

imposed thereat: Provided, further, That the grossed-up

value

of the fringe benefit shall be determined by

dividing the actual monetary value of the fringe benefit

by the difference between one hundred percent (100%)

and the applicable rates of income tax under Subsections

(B), (C), (D), and (E) of Section 25. (as amended by RA No

10963)

(B)

Fringe Benefit Defined. - For purposes of this

Section, the term ' fringe benefit ' means any good,

service or other benefit furnished or granted in cash or in

kind by an employer to an individual employee (except

rank and file employees as defined herein) such as, but

not limited to, the following:

(1) Housing;

(2) Expense account;

(3) Vehicle of any kind;

(4) Household personnel, such as maid, driver and

others;

(5) Interest on loan at less than market rate to the

extent of the difference between the market rate

and actual rate granted;

(6)

Membership fees, dues and other expenses

borne by the employer for the employee in social

and athletic clubs or other similar organizations;

(7) Expenses for foreign travel;

(8) Holiday and vacation expenses;

(9) Educational assistance to the employee or his

dependents; and

(10) Life or health insurance and other non-life

insurance premiums or similar amounts in excess of

what the law allows.

(C) Fringe Benefits Not Taxable. - The following fringe

benefits are not taxable under this Section:

(1)

Fringe

benefits

which

are

authorized

and

exempted from tax under special laws;

(2) Contributions of the employer for the benefit of

the

employee

to

retirement,

insurance

and

hospitalization benefit plans;

(3) Benefits given to the rank and file employees,

whether

granted

under

a

collective

bargaining

agreement or not; and

(4) De minimis benefits as defined in the rules and

regulations to be promulgated by the Secretary of

Finance,

upon

recommendation

of

the

Commissioner.

The

Secretary

of

Finance

is

hereby

authorized

to

promulgate,

upon

recommendation

of

the

Commissioner,

such

rules

and

regulations

as

are

necessary to carry out efficiently and fairly the provisions

of this Section, taking into account the peculiar nature

and special need of the trade, business or profession of

the employer.

CHAPTER VII ALLOWABLE DEDUCTIONS

SEC. 34. Deductions from Gross Income. - Except for

taxpayers earning compensation income arising from

personal services rendered under an employer-employee

relationship where no deductions shall be allowed under

this Section other than under subsection (M) hereof, in

computing taxable income subject to income tax under

Sections 24(A); 25(A); 26; 27(A), (B) and (C); and 28(A)(1),

there shall be allowed the following deductions from

gross income;

(A) Expenses. -

(1) Ordinary and Necessary Trade, Business or

Professional Expenses. -

(a) In General. - There shall be allowed as

deduction from gross income all the ordinary

and

necessary

expenses

paid

or

incurred

during the taxable year in carrying on or which

are directly attributable to, the development,

management, operation and/or conduct of the

trade,

business

or exercise of a profession,

including:

(i)

A reasonable allowance for salaries,

wages, and other forms of compensation

for personal services actually rendered,

including the grossed-up monetary value

of fringe benefit furnished or granted by

the employer to the employee: Provided,

That the final tax imposed under Section

33 hereof has been paid;

(ii)

A

reasonable allowance for travel

expenses, here and abroad, while away

from

home

in

the

pursuit

of

trade,

business or profession;

(iii)

A reasonable allowance for rentals

and/or other payments which are required

as a condition for the continued use or

possession,

for

purposes

of

the

trade,

business

or

profession,

of

property

to

which the taxpayer has not taken or is not

taking title or in which he has no equity

other

than

that

of

a

lessee,

user

or

possessor;

(iv)

A

reasonable

allowance

for

entertainment,

amusement

and

recreation expenses during the taxable

year, that are directly connected to the

development,

management

and

operation

of

the

trade,

business

or

profession of the taxpayer, or that are

directly related to or in furtherance of the

conduct of his or its trade, business or

exercise of a profession not to exceed such

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