What are De Minimis Fringe Benefits?

Employees and workers are the best resources of a business. They are the ones who contribute to the productivity and profitability of a certain company or enterprise. Thus, justice and righteousness dictate that these people should be given with due benefits, monetarily or personally. Aside from the salaries and wages they receive for the hours they have worked, the law also mandates that these workers be given with extra benefits that will promote their well-being at work and in life as a whole. Besides, employers and business owners know that the key to productivity is to always make their personnel motivated and happy. However, because any benefits that are given to workers form part of their income, income tax may be imposed on them. There are also benefits that may be exempted from income tax, like de minimis fringe benefits. The following are the definition and examples of these benefits according to the tax code, as amended.

What are De Minimis Benefits?

The term “De Minimis” benefits which are exempt from the fringe benefit tax shall, in general, be limited to facilities or privileges furnished or offered by an employer to his employees that are of relatively small value and are offered or furnished by the employer merely as a means of promoting the health, goodwill, contentment, or efficiency of his employees. The following are considered as “de minimis” benefits granted to each employee as updated by Revenue Regulation (RR) 5-2011 dated March 16, 2011 further amending Revenue Regulations No. 2-98 and Revenue Regulations No. 3-1998, as last amended by RR 5-2008:

(a)    Monetized unused vacation leave credits of private employees not exceeding 10 days during the year

(b)    Monetized value of vacation and sick leave credits paid to government officials and employees;

(c)    Medical cash allowance to dependents of employees not exceeding P750.00 per employee per semester or P125 per month;

(d)    Rice subsidy of P1,500.00 or one (1) sack of 50-kg rice per month amounting to not more than P1,500.00;

(e)    Uniforms and clothing allowance not exceeding P4,000 per annum;

(f)    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 per annum;

(g)    Laundry allowance not exceeding P300 per month;

(h)    Employees achievement awards, e.g., for length of service or safety achievement, which must be in the form of a tangible personal property other than cash or gift certificate, with an annual monetary value not exceeding P10,000.00 received by the employee under an established written plan which does not discriminate in favor of highly paid employees;

(i)    Gifts given during Christmas and major anniversary celebrations not exceeding P5,000 per employee per annum; and

(j)    Daily meal allowance for overtime work and night/graveyard shift not exceeding 25% of the basic minimum wage on a per region basis.

All other benefits given by employers which are not included in the above enumeration shall not be considered as “de minimis” benefits, and hence, shall be subject to fringe benefit tax.

To learn more about Fringe Benefit tax, please visit and read our article titled “How to Compute Fringe Benefit Tax in the Philippines”.

Source: Revenue Regulation (RR) 5-2011

Victorino Abrugar is a retired CPA practitioner, a blogger, speaker, and an entrepreneur. He's the President of Optixor, Inc., a digital marketing company based in the Philippines. Follow him on Twitter at @viclogic.


  1. anna says

    “…an established written plan which does not discriminate in favor of highly paid employees…”

    what does this exactly mean? i’ve exhausted most of the de minimis benefits so our employees will receive a bigger take home pay. should the award have a WRITTEN PLAN like lay out the criteria to be eligible for the award? example, for the length of service award, is it enough that we make a memo that employees who reach 3 years working with us will receive an award. can it be as simple as this?

    regarding Letter A (vacation leaves), does this specifically apply to vacation leaves only? what if our leaves are not called vacation/sick leaves. we actually just use service incentive leave which the employees can apply for either sick or vacation purposes.

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