What are the Fringe Benefits that are subject and exempted for tax?

As described by Revenue Regulation 3-98, Fringe Benefit means any good, service, or other benefit furnished or granted by an employer in cash or in kind, in addition to basic salaries, to an individual employee. Fringe benefits that are subject to Fringe Benefit Tax (FBT) are those given to employees other than rank and file.



Generally, the following fringe benefits given to employees holding a position other than rank and file are subject to FBT:

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;

9.       Educational assistance to the employee or his dependents; and

10.   Life or health insurance and other non-life insurance premiums or similar amounts in excess of what the law allows.



In general, the fringe benefits tax shall not be imposed on the following fringe benefits:

1.       Fringe benefits which are authorized and exempted from income tax under the Code or under any special law;

2.       Contributions of the employer for the benefit of the employee to retirement, insurance and hospitalization benefit plans;

3.       Benefits given to the rank and file, whether granted under a collective bargaining agreement or not;

4.       De minimis benefits

  1. Monetized unused vacation leave credits to employees not exceeding ten (10) days during the year;

a.    Monetized value of vacation and sick leave credits paid to government officials and employees;

b.    Medical cash allowance to dependents of employees, not exceeding P1,500 per employee per semester of P250 per month;

c.     Rice subsidy of P2,000 or one sack of 50kg rice per month amounting to not more than P2,000;

d.    Uniform and clothing allowance not exceeding P6,000 per annum;

e.    Actual medical assistance, e.g. medical allowance to cover medical and healthcare needs, annual medical/executive check-up, maternity assistance, and routine consultations, not exceeding P10,000.00 per annum;

f.      Laundry allowance not exceeding P300 per month;

g.    Employees achievement awards, e.g. for length of service or safety achievement, which in the form of a tangible personal property other than cash or gift certificate, with an annual monetary value not exceeding P10,000 received by the employee under an established written plan which does not discriminate in favor of highly paid employees;

h.    Gifts given during Christmas and major anniversary celebrations not exceeding P5,000 per employee per annum;

i.      Daily meal allowance for overtime work not exceeding twenty five percent (25%) of the basic minimum wage;

j.      Benefits received by an employee by virtue of a collective bargaining agreement (CBA) and productivity incentive schemes provided that the total annual monetary value received from both CBA and productivity incentive schemes combined do not exceed ten thousand pesos (Php 10,000.00) per employee per taxable year;


5.       If the grant of fringe benefits to the employee is required by the nature of, or necessary to the trade, business or profession of the employer; or

6.       If the grant of the fringe benefit is for the convenience of the employer.


1.              Housing privilege of military officials of the Armed Forces of the Philippines (AFP) consisting of officials of the Philippine Army, Philippine Navy and Philippine Air Force.

2.              A housing unit which is situated inside or adjacent to the premises of a business or factory (located within the maximum of fifty (50) meters from the perimeter of the business premises.).

3.              Temporary housing for an employee who stays in a housing unit for three (3) months or less.

4.              The use of aircraft (including helicopters) owned and maintained by the employer shall be treated as business use and not be subject to the fringe benefits tax.

5.              Reasonable business expenses which are paid for by the employer for the foreign travel of his employee for the purpose of attending business meetings or conventions, provided, expenses are supported by documents proving the actual occurrences of the meetings or conventions and evidenced by official invitations/communications from the host organization or entity abroad.:


a.      inland travel expenses (such as expenses for food, beverages and local transportation) except lodging cost in a hotel (or similar establishments) amounting to an average of US$300.00 or less per day, and

b.    the cost of economy and business class airplane ticket


It is to be noted that although the benefit may be exempt from FBT, it may, however, still form part of the employee’s gross compensation income which is subject to income tax and is required to be covered by the withholding tax on wages.

Also, representation and transportation allowances which are fixed in amounts and are regularly received by the employees as part of their monthly compensation income shall not be treated as taxable fringe benefits but the same shall be considered as taxable compensation income subject to the tax on compensation.


Reference: RR 3-98, RMC 50-2018

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