Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City
17% CONGRESS
Second Regular Session

6678

Wines om

House Bill No.

Introduced by Representative Wes Gatchalian

EXPLANATORY NOTE

Unlike the basic salary that wage earners make in the course of
their labor, bonuses are in the nature of gratuity, granted out of an
employer's appreciation for an employee's work and commitment. It is a
premium given to reward those who have gone beyond what was
demanded by their job descriptions, and have contributed to truly
making industries into a profitable enterprise. This measure is therefore
being proposed in order that these hardworking employees truly enjoy
to the fullest these benefits.

As it currently stands the aggregate cap for excluded bonuses
stands at eighty-two thousand pesos (P 82, 000.00), and the excess of
which are taxed in the schedule of net income. The intent of this bill is to
increase the cap of exemptions to one-hundred thousand pesos (P 100,
000.00) and to tax the excess at a uniform rate of five per centum (5 %).



Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City
17" CONGRESS
Second Regular Session

6678

House Bill No.

Introduced by Representative Wes Gatchalian

AN ACT ADJUSTING THE 13™ MONTH PAY AND
OTHER BENEFITS TAX RATE FOR PURPOSES OF INCOME TAXATION,
AMENDING FOR THE PURPOSE SECTION 32(B), CHAPTER VI OF THE NATIONAL
INTERNAL REVENUE CODE OF 1997, AS AMENDED

Be it enacted by the Senate and House of Representatives of the Philippines in Congress
assembled:

SECTION 1. Section 32(B), Chapter VI of the National Internal Revenue Code of the
Philippines (Republic Act No. 8424) is hereby amended as follows:

“SEC. 32. Gross Income. —

KXX

“(B) Exclusions from Gross Income. — The following items shall not be included in
gross income and shall be exempt from taxation under this Title:

“xxx,

“(7) Miscellaneous Items. — “xxx

“(e) 13% Month Pay and Other Benefits. — Gross benefits received by officials and
employees of public and private entities: Provided, however, That the total exclusion
under this subparagraph shall not exceed ONE-HUNDRED THOUSAND PESOS
(P100,000); PROVIDED FURTHER THAT ITEMS AS DEFINED HEREIN, IN EXCESS OF
ONE-HUNDRED THOUSAND PESOS (P100,000) OR AS HEREIN AFTER ADJUSTED BY
THE PRESIDENT OF THE PHILIPPINCE IN ACCORDANCE WITH (iv) OF THIS
PROVISION, SHALL ONLY BE SUBJECT TO A RATE OF FIVE PERCENT (5%), which
shall cover:


SEC. 2. Implementing Rules and Regulations. —The Secretary of Finance shall
promulgate the necessary rules and regulations for the faithful and effective
implementation of the provisions of this Act: Provided, That, the failure of the
Secretary of Finance to promulgate the said rules and regulations shall not prevent
the implementation of this Act upon its effectivity.

SEC. 3. Repealing Clause. —All laws, orders, issuances, circulars, rules and
regulations or parts thereof which are inconsistent with the provisions of this Act are
hereby repealed or modified accordingly.

SEC. 4. Separability Clause. — If any provision of this Act is declared unconstitutional
or invalid, other parts or provisions hereof not affected thereby shall continue to be
in full force and effect.

SEC. 5. Effectivity.—This Act shall take effect fifteen (15) days following its
publication in at least two (2) newspapers of general circulation.

Approved,