Title II — TAX ON INCOME
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%)21 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:22 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.
(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;
21
As amended by Section 10 of the TRAIN Law. Previous rate was 32%.
22
As amended by Section 10 of the TRAIN Law. Previous divisor was 68%.
National Internal Revenue Code of 1997 (as amended by the TRAIN Law, RAs 11256, 11346 and 11467)
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