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Last Updated on April 13, 2017 by Marie Bautista
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On October 4, 2013, the daily minimum wage rate for workers
in the National Capital Region will be increased by P10.00. Labor groups
insisted that the increase was so low (in Baguio where I live, there is no
increase and at P280.00 per day minimum wage, it is a whole lot lower than the
National Capital Region’s).
in the National Capital Region will be increased by P10.00. Labor groups
insisted that the increase was so low (in Baguio where I live, there is no
increase and at P280.00 per day minimum wage, it is a whole lot lower than the
National Capital Region’s).
Tables below revised as of March 20,2015.
Some comments in a television show included:
“SA TAX LANG MAPUPUNTA YAN!
Nope. Hindi mapupunta sa tax ang increase. The statutory minimum wage earned by
minimum wage earners is not taxable.
minimum wage earners is not taxable.
Minimum Wage Earners in the private and public sector are
exempted from withholding tax since January 1, 2006 as a form of focused
support by the government for low income earners. They were, however, subject to income
tax. This means that every payday, the company they work with does not deduct withholding taxes, but at year-end, if their taxable compensation are subject to income tax, they still have to pay the income tax due.
exempted from withholding tax since January 1, 2006 as a form of focused
support by the government for low income earners. They were, however, subject to income
tax. This means that every payday, the company they work with does not deduct withholding taxes, but at year-end, if their taxable compensation are subject to income tax, they still have to pay the income tax due.
Under Republic Act 9504 in 2008, Minimum Wage Earners
finally became exempt from income tax, making them, likewise, exempt from
withholding tax.
finally became exempt from income tax, making them, likewise, exempt from
withholding tax.
The statutory minimum wage is not taxable, and therefore,
not subject to withholding income tax.
The following are also exempt from income tax:
not subject to withholding income tax.
The following are also exempt from income tax:
- Holiday pay,
- Overtime pay,
- Night shift differential pay, and
- Hazard pay.
WHO IS A MINIMUM WAGE
EARNER?
EARNER?
A minimum wage earner is a :
* Worker in the private sector who is paid the
statutory minimum wage.
statutory minimum wage.
The daily minimum wage rate for
workers in the National Capital Region as of March 20, 2015 is P466.00 plus P15.00 COLA.
workers in the National Capital Region as of March 20, 2015 is P466.00 plus P15.00 COLA.
WHAT IS STATUTORY MINIMUM
WAGE?
WAGE?
Statutory Minimum Wage shall refer to the rate fixed by the
Regional Tripartite Wage and Productivity Board (RTWPB), as defined by the
Bureau of Labor and Employment Statistics of the Department of Labor and
Employment (DOLE). The RTWPB of each
region shall determine the wage rates in the different regions based on the
established criteria and shall be the basis of exemption from income tax for
this purpose.
Regional Tripartite Wage and Productivity Board (RTWPB), as defined by the
Bureau of Labor and Employment Statistics of the Department of Labor and
Employment (DOLE). The RTWPB of each
region shall determine the wage rates in the different regions based on the
established criteria and shall be the basis of exemption from income tax for
this purpose.
SUMMARY OF DAILY MINIMUM WAGE RATE AS OF MARCH 20, 2015
RULE ON MINIMUM WAGE
EARNER RECEIVING ADDITIONAL INCOME
EARNER RECEIVING ADDITIONAL INCOME
An employee who receives/earns additional compensation such
as commissions, honoraria, fringe benefits, benefits in excess of the allowable
statutory amount of P30,000.00 (now P82,000 under R.A. 10653), taxable allowances and other taxable income other than the STATUTORY
MINIMUM WAGE, HOLIDAY PAY, OVERTIME PAY, HAZARD PAY AND NIGHT SHIFT
DIFFERENTIAL PAY shall not enjoy the privilege of being a MINIMUM WAGE EARNER
and therefore, HIS/HER ENTIRE EARNINGS ARE NOT EXEMPT from income tax and
consequently, from withholding tax.
as commissions, honoraria, fringe benefits, benefits in excess of the allowable
statutory amount of P30,000.00 (now P82,000 under R.A. 10653), taxable allowances and other taxable income other than the STATUTORY
MINIMUM WAGE, HOLIDAY PAY, OVERTIME PAY, HAZARD PAY AND NIGHT SHIFT
DIFFERENTIAL PAY shall not enjoy the privilege of being a MINIMUM WAGE EARNER
and therefore, HIS/HER ENTIRE EARNINGS ARE NOT EXEMPT from income tax and
consequently, from withholding tax.
RULE ON MINIMUM WAGE
EARNER RECEIVING MIXED INCOME
EARNER RECEIVING MIXED INCOME
MINIMUM WAGE EARNERS receiving other income, such as income
from the conduct of trade, business, or practice of profession, except income
subject to final tax, in addition to compensation income are not exempted from
income tax on their entire income earned during the taxable year. This rule, notwithstanding, the statutory
minimum wage, holiday pay, overtime pay, night shift differential pay and
hazard pay shall still be exempt from withholding tax.
from the conduct of trade, business, or practice of profession, except income
subject to final tax, in addition to compensation income are not exempted from
income tax on their entire income earned during the taxable year. This rule, notwithstanding, the statutory
minimum wage, holiday pay, overtime pay, night shift differential pay and
hazard pay shall still be exempt from withholding tax.
WHAT IS HAZARD PAY
AND THE TAX RULE THEREON?
AND THE TAX RULE THEREON?
Hazard pay shall mean the amount paid by the employer to
minimum wage earners who were actually assigned to danger or strife-torn areas,
disease-infested places, or in distressed or isolated stations and camps, which
expose them to great danger of contagion or peril to life. Any hazard pay paid to minimum wage earners
which does not satisfy the above criteria is deemed subject to income tax and
consequently, to withholding tax.
minimum wage earners who were actually assigned to danger or strife-torn areas,
disease-infested places, or in distressed or isolated stations and camps, which
expose them to great danger of contagion or peril to life. Any hazard pay paid to minimum wage earners
which does not satisfy the above criteria is deemed subject to income tax and
consequently, to withholding tax.
NON-COMPENSATION
INCOME EARNERS WITH INCOME NOT EXCEEDING THE MINIMUM WAGE THRESHOLD ARE SUBJECT
TO INCOME TAX.
INCOME EARNERS WITH INCOME NOT EXCEEDING THE MINIMUM WAGE THRESHOLD ARE SUBJECT
TO INCOME TAX.
This was one of the emerging issues when Minimum Wage Earners
were exempted from income tax.
Self-employed and non-compensation income earners earning an amount equal or less than the
minimum wage rate are required to pay income tax. Is this a violation of the “ability-to-pay”
principle and a violation of the equal
protection clause?
were exempted from income tax.
Self-employed and non-compensation income earners earning an amount equal or less than the
minimum wage rate are required to pay income tax. Is this a violation of the “ability-to-pay”
principle and a violation of the equal
protection clause?
Related: How To File Your Income Tax Return in the Philippines
Determining
the minimum wage on a monthly basis
Determining
the minimum wage on a monthly basis
Clarifications on a minimum wage
earner’s income tax exemption (i.e. Because of the increase in minimum wage rate, some employees who used
to be taxable will now be considered Minimum Wage Earners. When will they
become tax exempt?)
earner’s income tax exemption (i.e. Because of the increase in minimum wage rate, some employees who used
to be taxable will now be considered Minimum Wage Earners. When will they
become tax exempt?)
Thanks for the useful information! I have no idea or shall I say, I totally forgot about taxes ever since I became an OFW.
Hi Ma'am Marie,
I would like to ask po regarding PENALTY SURCHAGE, INTEREST & COMPROMISE computation of Chattel Mortgage since I'm having a hard time computing it po, here are the details, viz:
Loan Amount: P1,169,350.00
Chattel Mortgage Notarized: Sept. 20, 2011 = must be paid on October 05, 2011
Expected Date to pay the DST = example: March 11, 2014 or March 13, 2014
Till now po the dst of the said chattel hasn't been paid and in line with this may I ask your assistance po on how much is it that I'm going to pay?
Hoping for your immediate reply.
Thank you very much po.
CD
Hi Ma'am Marie,
Good Evening po. Hope I can get your response po. I have a query po
May I ask your assistance po on how to compute for PENALTIES = SURCHAGE, INTEREST AND SURCHAGE of a chattel mortgage where the DST is still not yet paid. Here are the details po, viz:
Loan Amount: 1,169,350.00
Notarization Date of Chattel Mortgage: Sept. 20, 2011 ( Deadline of paying DST: Oct. 05, 2011)
Expected Date to pay for it: March 11, 2014 (Computation po) or March 17, 2014
May I ask your assistance po on how will you compute for it. I really need your assistance. Thank you very much po.
God bless.
Hi,
Pano po ba kumuha ng certificate from BIR regarding tax exemption. I am only earning P4,800.month. Ano form po ang kailangan?
Salamat po.
Good day…
Ask lang po ako regarding sa minimum wage earner income tax.
Based on the data:
1. P466/per day x 30days = 13,980 Monthly Income (Actual Working day is 26days) with paid 4 Rest Day… Yan po yung monthly income ng employee namin. Considered po ba sila sa tax exempt ng minimum wage earner.
2. our contractual employee is a daily rated of minimum pay of 466 per day (actual days payments).. Then after six months naging regular sila? then their salary increased morethan minimum rate. (example: January to June payroll is 466 per day then July to December 500 per day) combine ba annual yung income nya with tax, or July to december lang ang may tax?
Thank you po…. please reply also to my email address jiaporge@yahoo.com
Im a minimim wage earner in a company that i work for.my question can i request a copy of itr although according to bir regulations "minimum wage earners are not subject to pay income tax and file itr at bir" i will use itr as one of the requirement for my korean visa application. Please help me to understand this and how can i get itr. Hoping for your favorablw response to this matter.thank you.