Prescribing the Use of the Revised Withholding Tax Table Implementing Section 24(A)(1)(c) in Relation to Section 79 of Republic Act No. 8424

January 22, 1998 REVENUE MEMORANDUM CIRCULAR NO. 05-98 SUBJECT : Prescribing the Use of the Revised Withholding Tax Table Implementing Section 24(A)(1)(c) in Relation to Section 79 of Republic Act No. 8424 TO : All Internal Revenue Officials, Employees, Withholding Agents and Others Concerned For the information and guidance of all internal revenue officials, employees, withholding agents and others concerned, a Revised Withholding Tax Table (Annex A) is hereby prescribed for the computation of taxes withheld on compensation income (except fringe benefits granted or furnished to employees other than rank and file employees) earned beginning January 1, 1998. The revised tax table takes into consideration the new schedule of income tax rates and the increased personal and additional exemptions provided in Sections 24(A)(1)(c) and 35, respectively of Republic Act No. 8424 (RA 8424). Fringe benefits granted or furnished to the employees (except rank and file employees) by the employer, whether individual or corporation (unless the fringe benefit is required by the nature of, or necessary to the trade, business or profession of the employer or when the fringe benefit is for the advantage or convenience of the employer) shall be subject to a final tax of thirty four percent (34%) effective January 1, 1998; thirty three percent (33%) effective January 1, 1999; thirty two percent (32%) effective January 1, 2000 and thereafter, imposed upon the grossed-up monetary value of the fringe benefit, pursuant to Section 33 of RA 8424. The tax herein imposed is payable in the same manner as provided under Section 57 (A) of the same law. prcd The grossed-up monetary value of fringe benefit shall be determined by dividing the actual monetary value of the fringe benefit by sixty six percent (66%) effective January 1, 1998; sixty seven percent (67%) effective January 1, 1999; sixty eight percent (68%) effective January 1, 2000 and thereafter. The term fringe benefit means any good, service or other benefit furnished or granted in cash or in kind by an employer to the individual employee (except rank and file) such as but not limited to the following: 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 the 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 organization; 7) expenses for foreign travel; 8) holiday and vacation expenses; 9) educational assistance to the employee and his dependents; and 10) life or health insurance and other non-life insurance premiums or similar amounts in excess of what the law allows. All concerned are hereby enjoined to be guided accordingly and give this circular as wide a publicity as possible. LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue