Fringe Benefits Tax in the Philippines (2024)

Fringe benefit is a special form of benefits you provide your employees on in addition to their salaries and wages. It means any good, service or other benefit furnished or granted in cash or in kind by an employer – corporate or sole proprietor, to an individual employees. Providing the employees with such fringe benefits may be based on your company policy, or based on the contract with your employees. It could be a business related expense tending to personally benefit the employee like a vehicle to be used for business meetings and for personal travels, or a purely personal expense intended to benefit the employee like housing personnel – house maid or family drivers. In either case, they are treated as business expenses because they represents your expense payments relative to their employment. However, you have to pay fringe benefits tax in order for you to be allowed to claim the amount of fringe benefit and the amount of tax paid.

Hereunder are the sample fringe benefits that your may provide your employees but is not exclusive and you may still provide other benefits not enumerated herein:

  • Housing
  • Expense account
  • Vehicle of any kind
  • Housing personnel, such as maid, driver and others
  • Interest on loan at less than the market rate to the extent of the difference between the market and actual rate granted
  • Membership fees, dues and other expenses borne by the employer for the employees in social athletic clubs or other similar organizations
  • Expenses for foreign travel
  • Holiday and vacation expenses
  • Educational assistance to the employee or his dependents; and
  • Life or health insurance and other non-life insurance premiums or similar amounts in excess of what the law allows

Taxability of Fringe Benefits

Fringe benefits provided to managerial and supervisory employees are subject to 32% fringe benefit tax and you will withhold and pay the same as an employer. This means that the employee is no longer liable for the fringe benefit tax (FBT) and in case of non-payment, the Bureau of Internal Revenue (BIR) will run after you and not your managerial or supervisory employees. You base the 32% FBT on the grossed-up monetary value of fringe benefit in accordance with the valuation guidelines provided by the Bureau of Internal Revenue (BIR) in Revenue Regulations No. 13-1998. Please go through the regulations for more details on the valuation and computations. As employer , you will file FBT on a quarterly basis using BIR Form No. 1603 (Click to download form).

For special managerial or supervisory employees not covered by the 5-32% income tax rules, the FBT rates would vary depending on house they are taxes. The reason is that the FBT tends to recover the income tax of the employee so the rate follows the income taxation of such employees as follows:

  • Non-resident alien employees not engaged in trade or business – 25% FBT
  • Special alien employees of ROHQ, RHQ, etc. – 15% FBT

If an employee is a rank-and-file, then, you apply withholding tax on compensation rules and not FBT rules. Likewise, please note the following fringe benefits which are not taxable when provided by you as employer to your managerial and supervisory employees:

  • Fringe benefits which are authorized and exempted from tax under special laws
  • Contributions of the employer for the benefit of the employee to retirement, insurance and hospitalization plans;
  • Benefits given to the rank and file employees, whether granted under a collective bargaining agreement or not; and
  • De minimis benefits


Providing fringe benefits is a management consideration that you should consider. One it would benefit the employee so as to boost him to perform, and, the other is you can claim more expenses. However you have to pay fringe benefits tax, where, applicable.


  • Section 33 of the Tax Code, as amended
  • Revenue Regulations 3-1998 – Fringe Benefits Tax Regulations

Disclaimer: This article is for general conceptual guidance only and is not a substitute for an expert opinion. Please consult your preferred tax and/or legal consultant for the specific details applicable to your circ*mstances. For comments, you may also please send mail at info(@), or you may post a question at Tax and Accounting Center Forumand participate therein.

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Fringe Benefits Tax in the Philippines (2024)
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