Holiday Greetings! Merry Christmas and a Happy New Year! 🙂 ChristmasBonus

Its holiday season and most organizations are now releasing Christmas bonuses or gifts to its employees. However, did we ever asked ourselves if the Christmas bonus we receive should be taxed or not? If not, lets take a look on certain BIR rulings that talks about this issue.

What is a Christmas Bonus?

A Christmas Bonus is a form of incentive, gift, or remuneration given by Employers to its employees during the holiday season which falls every December.

Is the Christmas Bonus only in the form of cash or it could be in kind?

A Christmas bonus is not limited to Cash Gifts. It could also be in kind.

Is the Christmas Bonus Taxable or Exempt?

BIR Revenue Regulation 2-98 sec. 2.78.1 (A3c) as amended by RR 5-2011 states that gifts given during Christmas and major anniversary celebrations not exceeding five thousand pesos (P5,000.00) per employee per annum is EXEMPT from tax. Hence, any excess in the Five Thousand Pesos (P5,000,00) threshold shall be lodged under the new statutory cap of Eighty Two Thousand (P82,000), formerly Thirty Thousand (P30,000.00), and if it exceeds the statutory allowance shall be TAXED accordingly.

Merry Christmas and Happy New Year once again. 🙂

Greg Aquino

Greg V. Aquino is a Certified Public Accountant engaged in Public Practice since the year 2010. He is the managing partner of Clemente Aquino & Co., CPAs since the year 2013. Sector experience includes food & franchise company; real estate; distributorship; gasoline dealership; PEZA companies; BPOs; and non-profit organizations. He can handle individual tax planning; corporate tax planning; estate planning; transfers of real and personal properties; setup of a corporation, partnership, one-person corporation, and sole proprietorships; local government taxation; corporate housekeeping; resident agent services; corporate secretariat; fs preparation or compilation; fs reconstruction; fs audit; internal audit; and others.

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